Thursday, March 24, 2016

Amaya CEO charged with insider trading Amaya stock crashes 20%. I'm buying more


The Toronto-listed company confirmed that Baazov had been hit with five trading charges by the AMF, but noted that no allegation of wrongdoing by Amaya or any of its subsidiaries or other directors or officers had been made.

Amaya said that the charges related to communicating privileged information involve allegations relating to a former financial advisor to Amaya, while the charges relating to influencing or attempting to influence the market price of Amaya securities involve allegations relating to that same advisor and an employee.

As noted in the article there have been no charges against the company itself only the CEO David Baazov. The stock got nailed for over a 20% drop but did come back a bit later in the day. 

Bad news is never good and we never like to see a stock we own drop 20% but I for one bought more shares yesterday. Nothing fundamentally changed in the business yesterday. It seems people just knee jerked sold.

There is some risk here if the charges prove to be true and it makes regulators in other jurisdictions question whether they should allow a company that is led by a potential felon open up online gambling in their state.

However we are a long way from that. The Amaya board said they investigated this internally and had outside consul look at this and found no improprieties. The charges will be aggressively defended against by the CEO and in the mean time it should not affect business one bit. 

Nevertheless, this will probably be dead money for a while until it becomes more clear what the outcome of this case ends up being. I like the company and the dominance it has in online poker and the sportsbook and online casino is on fire so I think in the end this will do well regardless of what happens to the CEO. 

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