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Is it a Good Move to Invest in NeoGames (NGMS)?

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Alta Fox Capital, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. In Q2 2022, the Alta Fox Opportunities Fund (“the Fund”) produced a gross return of -8.46% and a net return of -8.66%. The Fund’s average net exposure during the quarter was 73%. Since its inception in April 2018, the Fund has produced a gross return of 505.72% and a net return of 330.36% compared to the S&P 500’s return of 54.52% and the Russell 2000’s return of 17.91%. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Alta Fox Opportunities Fund mentioned NeoGames S.A. (NASDAQ:NGMS) and explained its insights for the company. Founded in 2014, NeoGames S.A. (NASDAQ:NGMS) is an Israel-based software company with a $395.3 million market capitalization. NeoGames S.A. (NASDAQ:NGMS) delivered a -44.96% return since the beginning of the year, while its 12-month returns are down by -68.31%. The stock closed at $15.29 per share on July 29, 2022.

Here is what Alta Fox Opportunities Fund has to say about NeoGames S.A. (NASDAQ:NGMS) in its Q2 2022 investor letter:

"NeoGames SA (NASDAQ:NGMS): Since Q1 of this year, several improvements to the fundamental thesis have emerged. Over the last twelve months, NGMS had a significant headwind as their largest market, Michigan, showed monthly revenue declines after more competitors entered the iCasino market. However, our channel checks suggest that Michigan’s iLottery sales have returned to a position of growth in Q2 and we believe this headwind now provides easy comparisons for the next year. NeoGames also recently announced its first full-service iLottery & sports betting contract win in Brazil and will be supporting the Loteria Mineira, the official state lottery of Minas Gerais, Brazil’s second largest state with a population of ~21M.2 Our preliminary estimates suggest this contract could represent more than 75% of the value of the Michigan contract at maturity which we estimate would translate into a >15% uplift to 2021’s pro forma EBITDA number. While it will take time for this contract to reach maturity, the win increases NGMS’ strategic value as the dominant and best-inclass iLottery provider globally. The ability to buy a stake in the leading global digital lottery provider with 20% organic revenue growth, EBITDA leverage, and significant insider ownership at less than 7x our 2024 earnings per share estimate seems extremely attractive."

Major Retailers and Services That Accept Bitcoin in 2018
Major Retailers and Services That Accept Bitcoin in 2018


Our calculations show that NeoGames S.A. (NASDAQ:NGMS) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. NeoGames S.A. (NASDAQ:NGMS) was in 16 hedge fund portfolios at the end of the second quarter of 2022, compared to 16 funds in the previous quarter. NeoGames S.A. (NASDAQ:NGMS) delivered a 16.99% return in the past 3 months.

In October 2021, we published an article that includes NeoGames S.A. (NASDAQ:NGMS) in the 11 Best High Dividend Stocks Under $50. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.