View from the City: how to make your money work in the current market

The second most popular question asked by clients at the moment – second only to ‘how much will we make if we sell our company’? – is ‘where should we put our money to work in the current market’? Amid this seemingly unending crunch, there could indeed be some ways to augment financial portfolios, and while no one strategy is better than the other – or guaranteed to be foolproof – at the very least there’s the prospect to ameliorate diversification.

Just to be clear here, this is not investment advice. Readers are always encouraged to do their research when making investments. Also, in the general interests of relevancy, while it’s wise and sensible to transact in all manner of securities, this discussion will be solely limited to investments related to the gambling industry. Finally, some of the companies below may or may not already be in our investment portfolio…

It makes sense to start with raw equities. Over the last few weeks publicly traded gaming companies have gradually released their Q1 figures, and it’s no surprise that most of them have been down year-on-year. However, while the bottom hasn’t necessarily been called for some, there are a few rising stars from the fracas. Honourable mentions go to William Hill, whose share price has tripled from its low point in mid-March as well as GVC, having pared back most of its losses. Both companies stand to receive a significant rebate from the taxman on the FOBT ruling last month; after the long-running case found favour with the gambling companies. Similar performing equities exist state-side – including Penn and Caesars, however, it’s important to note that all these stocks are currently traversing what’s known in technical analysis as a V-Bottom pattern (they have yet to test their previous highs, in which case they could go in either direction). In other words, handle with care.

On the affiliate side, Better Collective’s share price has vigorously defended any disruptions to the macro-economic climate; but the question is: now that the price has plateaued for a few weeks, are there any more significant medium-term gains to be made? Depending on risk appetite (and stomach), it might make more sense to sink equity into relatively good value stocks such as XLMedia – now down almost 90% since their peak in 2018, but up 50% since their low in March – and Catena Media, whose share price has more than doubled over the last four weeks. That’s assuming, of course, regulation looks favourably to affiliate marketing in the medium term…

Further afield, some solid gains this year have been made in specialist ETFs – exchange traded funds that specifically target gaming or gaming-ancillary services. A balanced ETF could be a smart way to add focused exposure to a narrow vertical, such as gambling and esports. A risk-adjusted exposure in an overall portfolio, usually around 5-10%, in gaming ETFs makes sense alongside larger holdings in more stable investment options, like conventional equities and funds. Some UK and state-side ETFs, such as VanEck and RoundHill, place a broad focus across publicly traded gambling and esports companies and are globally up more than 40% year to date.

But just around the corner, there are even more exciting (read: nail-biting) ways to make money in gaming. A few emerging VCs will shortly release early- and mid-stage growth funds specifically around gaming and fintech companies, capitalising on growing investor demand for new sources of perpetual income. These venture funds promise high returns in exchange for the thrill of rollercoaster rides in the form of start-up equity. Might sound too risky for some, but then again isn’t that what the essence of gambling should be all about? You only live once after all…