Debra Fine’s Fine Capital Goes Activist on Scientific Games $SGMS

Debra Fine’s Fine Capital disclosed a 5.5% activist stake in Scientific Games (SGMS) on Friday. They acquired more than 2.3 Million shares since the end of first quarter when they had around 3% of outstanding shares. They were willing to pay as high as $10.20 per share. They were able to buy 75K shares at $7.25 on August 8th when the market was going down sharply. Currently the stock trades at $8.28. The purpose of the transaction was explained as follows:

Scientific Games Corp

The purpose of the acquisition of the Shares by the Reporting Persons is for investment, and the purchases of the Shares by the Reporting Persons were made in the ordinary course of business and were not made for acquiring control of the Issuer.  The Reporting Persons, from time to time, will communicate with the Issuer and other holders of Shares.  The Reporting Persons may in the future purchase additional Shares or dispose of some or all of their Shares in open-market transactions or privately negotiated transactions.  The Reporting Persons do not currently have any plans or proposals that would result in any of the actions described in paragraphs (b) through (j) of Item 4 of the instructions to Schedule 13D.

Stuart Peterson’s Artis Capital had the largest stake in the company among the 300+ hedge funds we track. According to Yahoo Finance, Scientific Games Corporation provides gaming solutions to lottery and gaming organizations worldwide. The company operates in three segments: Printed Products Group, Lottery Systems Group, and Diversified Gaming Group. The Printed Products Group provides instant lottery tickets and related services, including ticket design and manufacturing, as well as value-added services, such as game design, sales and marketing support, specialty games and promotions, inventory management, and warehousing and fulfillment services. It also offers paper-based prepaid phone cards, licensed games, promotional entertainment, and Internet services. The Lottery Systems Group provides customized computer software, equipment, and data communication services lotteries. Its products and services comprise transaction processing software for the accounting and validation of instant and online lottery games, point-of-sale terminals, central site computers, communications technology, and ongoing support and maintenance for these products. This group also offers software, hardware, and support for sports betting systems, video lottery systems, and the operation of credit card processing systems for non-lottery customers. The Diversified Gaming Group provides services and systems to private and public operators in the wide area gaming industry, including server-based gaming machines, and sports betting systems and services; and pari-mutuel wagering industries.

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