The US hedge fund manager, John Paulson, who famously backed Sino-Forest, before the Canadian business disappeared following short seller inquiries, recently took a large stake in UK-listed Jackpotjoy, a transatlantic transplant known in the Toronto market as Intertain.
As short sellers have already raised concerns about Jackpotjoy, this time, perhaps Paulson’s contrarian optimism is on to something? He did make a fortune by carefully selecting mortgage backed securities to bet against before the financial crisis, after all.
And yet a glance at full-year results released Wednesday may not offer much reason for confidence. Nor does a 5 per cent jump in the share price, to 560p, which fails to retrace the fall of preceding days.
Skip the first 9,000 or so words and go direct to the audited financial statements: Jackpotjoy lost £41m in 2016, on revenues of £269m.
The loss is less than the £115m recorded for the year before, but once foreign currency effects are added in the total comprehensive loss was a shade over £80m in each of the last two years.
In management’s commentary, the focus is instead on adjusted measures of profits in a strong year when “on a constant currency basis we achieved the high end of our market guidance.”
Jackpotjoy’s main asset, remember, is simply the Jackpotjoy brand. The company pays another to operate its online bingo site, and that third party holds the UK licence and is still owed large payments tied to the purchase of the brand.
The annual interest expense for serial loss-making Jackpotjoy, meanwhile, was £36m last year: 13 per cent of revenues.
Still, at number three in the shareholder list Mr Paulson is in good company. Odey Asset Management is at number six.