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Einhorn Buys 3.9m Amaya Shares; Baazov Kickbacks Exposed
The behind-the-scenes workings of PokerStars' parent company, Amaya Inc., continue to intrigue with billionaire David Einhorn now stepping in to the mix.
According to the Motley Fool, an investing advice website, the respected billionaire Einhorn bought 3.9m shares in Amaya via his Greenlight Capital Hedge Fund over the last quarter.
At an average cost of US$13.77 per share that puts his investment at $53.7m. It also comes at a particularly interesting time in the company's history as embattled CEO David Baazov, under investigation for insider trading, recently stepped down from his position for good.
Long Time Poker Player, Legendary Investor
If you've followed poker passionately over the last decade or so, Einhorn's name should sound familiar as he's had a couple of highly visible poker moments in the sun.
In the record-breaking 2006 WSOP Main Event Einhorn finished 18th and was featured plenty on the ESPN coverage, both for his financial background and deep run and his attire. He wore a sweatshirt with his kids hand prints on it for good luck.
Einhorn also hit the big-time poker spotlight back in 2012 when he finished 3rd in the inaugural $1 Million Big One for ONE DROP and donated all of his winnings to charity.
A regular in major High Roller events and the Main Event, he's also likely one of the "recreational" players expected to play in the upcoming One Drop event in Monaco.
Outside of poker Einhorn is famed as one of the world's best investors, turning Greenlight Capital into one of the most profitable hedge funds ever with a 16.5% annualized rate of return since its founding in 1996.
His particular strength is finding undervalued companies and scoring big when they bounce back down the road, which seems to be his take on Amaya. The Motley Fool expects Amaya to earn $2.09 per share in 2016 and $2.51 a share next year, spurred in part by the recent departure of CEO David Baazov.
Baazov and Brother Investigated for Kickbacks
Speaking of former CEO Baazov, things haven't turned any brighter for him since resigning from all of his positions within Amaya over the summer.
The spearhead of Amaya's $4.9bn acquisition of PokerStars back in 2014, Baazov has been under investigation for insider trading by the Autorité des marchés financiers (AMF) in Quebec.
The investigation has reportedly revealed, according to The Globe and Mail, that the advantage trading existed long before the takeover of the Rational Group, PokerStars' former owners, and involved a kickback scheme to award those who shared privileged information.
According to the Globe:
"In court documents laying out its case against Josh Baazov, David’s brother, and 12 others accused in March of trading on inside information involving Amaya, the AMF says its investigation has found evidence that the group had a refined system that rewarded insider information with kickbacks typically representing 10 per cent of the net profits gained.
“'These were the activities of an organized group that traded regularly on information of numerous mergers and acquisitions still unknown to the public,' the AMF said in the documents, adding the individuals involved sometimes used coded language to conceal the real meaning of their messages to each other.
"Information filtered down and out in a pyramid-like fashion with David Baazov being the source of much of the privileged intelligence, the regulator alleges. Kickbacks were paid in many forms, including cash, cheques and luxury objects such as a $13,000 Rolex Daytona watch, the regulator said. In all, the AMF estimates the individuals made a combined profit from the trades of about $1.5-million."
Read the full piece here.