Sometimes you cannot look a Gift Horse in the mouth, as they say.

Earlier on this month a couple of Gambling Companies declared a stake in 888. This has put a rocket under the share price, taking it from about 70p to about £1.20 today.

888 is a high risk stock since it bought William Hill for massive amounts of debt. Whilst a lot of it (70%) is fixed debt for a couple of years, the rest is not. In their April Trading Statement, 888 highlighted debt being a possible issue, restraining investment. Since then, inflation remains stubbornly high and rates have climbed, with more to come.

Whilst I don’t follow Sports (so take my thoughts with a pinch of salt) , I’m not aware of any significant events in 2023 that could lead to a surge in betting. Similarly, a lot of fixed rate Mortgages are coming to an end and money is going to be tighter for the remainder of 2023.

This is a Business with a high level of debt that means that any dip in earnings will put the Business into the Red. Debt payments will have a disproportionate effect on profitability. With a half-year Report due any day now, there is a not insignificant chance that earnings will be down and possibly even some sort of money raising to pay down debt.

For me the downsides currently outweigh the upsides, so I have sold all my holdings. I’ll have a muse as to what to do with the cash. TEP, IHC, CEY and ULVR are under consideration.

Sell price (ave): £1.195

Buy price (ave): £0.79

Dividend income: 0

Gain: 50% total (0% + 50%) 250% pa (I wish….)