This is Global Gaming Expo week, meaning that virtually the entire gambling industry assembles in Las Vegas to gander at, or pitch, the latest in games and technology.

 

But, while the attention is on the whizzes and whirls of slot machines, investors might want to take time out to look at some very recent history.

 

And that is the stock buying by company insiders in August and September.

 

Among the companies with consistent insider buying: Full House Resorts, Isle of Capri, WMS and Pinnacle.

 

At Isle, Pinnacle and WMS the CEOs have stepped up and made significant purchases: Ten thousand shares by Virginia McDowell at Isle, 100,000 by Anthony Sanfilippo at Pinnacle, 55,000 shares by Brian Gamache at WMS.

 

And directors are stepping up: Multimedia Games Chairman Stephen Greathouse at 25,000 shares, Isle Chairman Jim Perry at 12,000 shares, and directors at Full House, IGT, MTR Gaming, PokerTek and Pinnacle.

 

As is often observed, director buying can be more telling than stock purchases by senior officers, as directors don’t have the political motivation to make public displays of confidence, so they reach into their wallets for only one reason – they think the price is going up.

 

Purchases relatively small in dollar terms might be seen as token efforts to send a message to investors that prices are low and insiders have confidence.

 

But buying in ISLE, PNK and MGAM has been significant.

 

At ISLE, shares have been bought by several top executives, and director Robert Goldstein, a member of the founding family.

 

At PNK , Sanfilippo has been joined by CFO Carlos Ruisanchez and two directors.

 

CFO Scott Schweinfurth and COO Kenneth Lochlatto have joined Gamache at WMS.

 

A case can be made that these stocks are selling at very low prices that are even cheaper looking into the future.

 

WMS at around $18.50 is above a third of its 52-week high of $49.11. Growth has slowed as ship share has reached the point where the easiest pickings have been made. But at just a little over four times enterprise value to trailing EBITDA, the selling might have been over done. And management is committed to growing profit margins through cost cutting and efficiencies.

 

ISLE at around $5 is less than half its $11.22 peak, and it is selling at just about seven times EV/EBITDA. And EBITDA should grow as ISLE opens casinos in Missouri, then Pennsylvania.

 

PNK also sells at just over seven times EV/EBITDA and has a growth project, a new casino to open in Baton Rouge. Further, Sanfilippo has been increasing PNK’s historically low profit margins, giving the company a potential double dose of growth.

 

Finally, MGAM is selling at just two times EV/EBITDA, an astounding number for a company that has its own growth prospects as it gains new licenses—just won its Nevada license—as it transforms into a national Class III slot supplier of its own games.

 

So, if you’re a value investor, several sets of insiders are giving you a signal that they’d like you to look at their companies.

 

 

By Frank Fantini

Frank Fantini is the editor and publisher of Fantini’s Gaming Report. A free 30-day trial subscription is available by calling toll free: 1-866-683-4357 or online at www.gaminginvestments.com.

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