Private Investor: The one way to make money from a poker game
Saturday 08 January 2005
Sometimes you buy shares for very odd reasons. I recall buying some shares in an outfit named
Sportingbet.com a couple of years ago, because I met someone who worked for it who told me all about this exciting new venture and I have to say I was very intrigued by the operation.
Sometimes you buy shares for very odd reasons. I recall buying some shares in an outfit named Sportingbet.com a couple of years ago, because I met someone who worked for it who told me all about this exciting new venture and I have to say I was very intrigued by the operation.
If the name isn't a clue, let me enlighten you as to its main line of business: online gambling. Those with an ethical disposition should turn away now. I didn't put much into it, watched it collapse in the great dot. com disaster and didn't bother selling the shares because it was hardly worth it. They were, mentally, written off - until now.
I recently ran into the chap who worked at Sportingbet, and who has since moved on. He pointed out that the shares have been doing rather well lately - so I checked and, yes, indeed they have almost doubled in value since I bought them (at 100p, and they are approaching 200p now) and are up ten-fold on their nadir.
A few interesting things have been happening to this stock. It has had its .com suffix amputated, an occupational injury for companies in this sector; it has bought an American concern named Paradise Poker; and it has been the subject of much takeover speculation and bullish comments from City folk. So my early faith in Sportingbet has been repaid, although it is a rather different animal from the one I initially invested in. Indeed, I have read that it is the biggest online gambling website in the world, which I found rather hard to believe.
However, you can never lose, I have found, by investing in vice. I was a very satisfied investor in the William Hill float and greatly regret jettisoning those shares. The brewers have rarely let me down. Virtue has its own rewards, so they say, but, evidently, so does human vice. So, on the strength of all this, I have topped up my holding in Sportingbet in the hope that it will double again, although the recent very strong run may not be sustained for long.
Poker is the sort of fad that can quickly become an obsession. In the old days, as far as I can see, to get a game of poker going you had to have a group of wise-cracking, hard-bitten cronies like Phil Silvers or Walter Matthau, a bloke with a visor dealing the cards, a bottle of bourbon and an understanding wife who'll make the guys some pastrami-on- rye sandwiches.
Now all you need is a computer. Just think of the potential. You can play cards all day and all night at home or when you're supposed to be working. Doesn't appeal to me, but there's evidently an appetite for it. It has already taken off in the States, and, as we all know, that means it'll be over here before too long. Sportingbet must still have some more growth potential, especially as it is trading on quite a modest prospective PE ratio of about 15. I've even thought of a new slogan for them: "Sportingbet; the global player you've never heard of."
Elsewhere, it's the same old story. Sensible stocks such as Tesco, Vodafone, AG Barr and Shell and the long-term money going into the JPMF Indian Investment Trust showed steady progress in 2004, and should again underpin the wilder bits of the portfolio in 2005. And there is none wilder than Matrix Communications.
I have to stress that I have no connection with the firm whatsoever; it's just a fairly blind punt recommended by a friend unconnected with the City. In fact, he got the idea from the Investors Chronicle, so it's been open secret for a time. Matrix Communications jumped by a quarter on Christmas Eve - a nice little present - and has edged ahead since. It's now up 47 per cent on when I bought it in November. What an exciting time - almost as thrilling as a game of online poker. Just think what it'd be like if the bulls came back to the market.
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