Multimedia Games, Inc. (NASDAQ:MGAM)
A supplier of interactive systems, electronic games, and gaming terminals for the Native American gaming market, as well as for the growing racetrack casino, charity and commercial bingo, and video lottery markets.
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Thanks Seth Klarman!
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What the Wampum?
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Video Games are big business
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New management with new products should be 15-20% EBITDA grower in current environment. Has optionality if find a "hit" product to do much better.
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I work with this companies software daily, and in regular contact with representatives of the company. They have a new management team in place and for the first time have a sense of direction. They recently signed a new agreement with the NY state lottery will be coming out with new versions of customer software in coming months that should lead to increased sales of add-ons such as slot machines.
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Lastprice under book value by 25-30%. Very low debt, current price only 1.9 times cashflow, positive net profit margin, projected company growth over 100% in the next 18 months. To many major funds and firms own over 65% of the 26 million shares outstanding. (some people really thing it has major growth prospects [hhhmmm]). Last officer to transact was june 07, before price spike and major trend downwards. I feel current price should be closer to 6 and could trend to 8 by year end.
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Unrealized market in Mexico. Stock price does not reflect this or the new recent addition of machines in new markets.
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Multimedia games in my opinion in a very good place for future gaming growth.
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Investor action will finally unlock hidden value in MGAM. Market is obsessed with Oklahoma, but missing value in Mexico, which isn't apparent yet in numbers today. Liberation Group and other large investors want management to act more decisively and buyback 30% (or more) of their stock back. MGAM could be a good (and cheap) buyout for larger players like IGT to get a good contract in Mexico.
Top 10 shareholders control over 65% of stock, making a sale easier
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