Penn National takeover of theScore

Recently I received a notification on WealthSimple regarding the takeover of theScore (a Canadian company also known as Score Media and Gaming Inc.) by Penn National (an American company)...

What followed was that I received stocks in Penn National... and cash.

Now I have to decide several things, chief of which is:

Is it worth keeping my new stocks in Penn National (PENN), or should I sell them?

When I first bought theScore stock (SCR.TO) it was a smart buy. The company is essentially an online casino that uses an app that allows users to gamble on sports. So very low overhead, but high profits thanks to the app being the #1 sports gambling app in Canada (and #3 in North America).

It was a smart move for me to buy the stocks... and it is similarly a smart deal for Penn National (which runs hotels, casinos, slot machines, online gambling, horse races, etc.

And we're not talking a small amount either. The takeover of theScore went to the tune of $2 billion USD. So that isn't chump change.

Now you might think: "Wait, isn't there a pandemic going on? Isn't a company that owns hotels inherently risky?"

Yes, in a country that cares about the pandemic. But we're talking about American hotels, a country with a reasonably high vaccination rate and a laissez-faire approach to handling the pandemic. America is open for business. Come hell or high water, they want to make money.

So should I feel guilty about owning hotels in the USA where people will go out, socialize and a percentage of them will die from COVID because they aren't vaccinated?

Nope.

Absolutely not. They made their choice not to get vaccinated. If they die, they die. Not my fault. They live in a pro-choice country (except for Texas).

So the fundamentals of owning stocks in a company which owns hotels/casinos/gambling is pretty solid. Pandemic? Pff! It is full steam ahead in the USA.

So I might as well keep the American stocks in PENN for now. They have a nice upward curve, so they do fit into my definition of a Darling Stock.

What about my rule about preferring to own Canadian stocks?

It is true, I do prefer to own Canadian stocks.

But I also own Canadian companies (and ETFs) which operate internationally. And I own ETFs that invest in American stocks, but are hedged in Canadian dollars. This allows me to invest in American companies, but limits my risk since I prefer to use ETFs that are hedged.

So it doesn't matter.

What about the cash I received after the takeover?

I received half the value of my SCR.TO stocks as cash. So far I have decided to use a portion of that cash to invest in:

FIE.TO (iShares Canadian Financial Monthly Income ETF)

Now it should be noted that this ETF is currently growing very nicely due to the pandemic, but historically tends to have a flatter curve. What I like about FIE is that it has a yield of 5.79% and it is a historically very stable ETF. So it is a smart buy as a dividend ETF.

I expect it to trend upwards for the next year and then level off, and continue to provide nice fat dividends.

I haven't decided what to do with the rest of the cash I received from the takeover of theScore, but I will sprinkle it around in different things.

Two ETFs Worth Researching

 ETFs is something to definitely consider if you're looking for stocks, but you're not sure what to invest in.

An ETF (exchange traded fund) is when an investment company or investment bank creates a fund which people can buy in a manner similar to buying a stock, and then that company/bank uses the money from the fund to invest in other companies which they think will go up in value (and/or provide dividends).

The company or bank managing the ETF takes on the responsibility of managing the money/trading stocks of a variety of companies for you, and you don't have to worry about doing it yourself.

However not all ETFs actually have that nice "Darling Curve" that I am looking for.

Take XIU (from BlackRock) for example. You can see that big dip from March 2020 when the pandemic happened and how it hurt a lot of the stocks that the ETF was invested in. This wasn't that unusual however. A lot of stocks took a nose dive in March 2020, and as you can see many of them also recovered.

XIU has seen soared to record highs, which tells me that this is an ETF that is recession resistant and recovers quickly.

Did it take a few months to pull off a full recovery? Yes, it did. But did it pull it off? Yep. Yep, it did.

What I also like about ETFs is that they're stable. They're basically guaranteed to go up in value. Eventually. Not always right away. You just have to be patient, which makes them a good candidate for long term investments.

The other thing I like is that they invest in companies that I might not otherwise consider investing in (or can afford to invest in). Thus it allows me to diversify my portfolio more, with less research required on my part, while still hedging my bets.

Overall, a smart investment.

The next one I want to talk about is WSRI (Weathsimple's North America Socially Responsible Index ETF).

WSRI is a relatively new ETF. It has only been around for a little more than a year, hence why the chart shown on the right is set to 1Y (one year).

But during that one year you can see the ETF went up in value by almost 25%, and that it is very consistent about going up in value.

That is a very sexy Darling Curve in my opinion.

So if you want to hedge your bets by investing in ETFs I recommend starting with these two ETFs.

Any other ETFs you come across you should definitely research, but when researching these two I think you will find them to be very smart choices.

Definitely worth researching AND investing in.

HAPPY INVESTING!