Why Scientific Games Corp. Shares Popped

Is this meaningful? Or just another movement?

Jun 10, 2014 at 5:52PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Scientific Games Corp. (NASDAQ:SGMS) were dazzling the market today, gaining as much as 20% and finishing up 12% after naming a new CEO.

So what: The lottery and slot-machine specialist said Gavin Isaacs would step into the leadership role immediately, replacing David Kennedy, who had served as CEO in an interim role for six months. Kennedy will remain on as executive vice chairman. Isaacs brings more than 15 years of gaming industry leadership to the table and was most recently the CEO of SHFL Entertainment, which Bally Technologies bought last November for $1.3 billion.  

Now what: Chairman Ron Perelman called Isaacs "a very talented and seasoned gaming industry executive with the necessary skills to lead our Company to the next level of growth and performance." The market generally applauds a company's move from an interim CEO to a permanent one, but the response to Isaacs is especially strong, reflecting the market's faith in him. The gaming specialist has been saddled with losses recently and is still in the process of integrating its recent acquisition of WMS Industries. That acquisition nearly doubled as Scientific Games' revenue and would seem to present an opportunity for Isaacs as he takes the helm. The stock is trading near 52-week lows and easily could move higher as Isaacs implements changes. 

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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