Former analyst says PENN
offers too little for Argosy

Nov 16, 2004 5:04 AM

Two years ago, gaming companies often watched their share prices rise and fall on the word of one man, Jason Ader. At that time, Ader was the most respected analyst on Wall Street and often was quoted in the pages of GamingToday because of his close professional relationship with the late publisher of this newspaper, Chuck Di Rocco.

However, Ader decided to move on from his analyst position and joined with a group of investors in the formation of a new company, Hayground Cove.

Last week, Ader’s name once again was on the lips of gaming company investors because of a letter he wrote to the Wall Street Journal, a missive that was then widely quoted within the industry.

In the letter, Ader asked members of the board of directors of Argosy Gaming Company (AGY) to reconsider their decision to sell the company to Penn National Gaming Inc. (PENN) for $47 per share. He said he felt the price was too low.

Ader’s letter questioned the comments made by Argosy officials just prior to the sale announcement since the comments seemed to downplay the company’s future. The comments also caused some analysts to downgrade the company’s share price. It was noted that following the comments, the share price of AGY dropped from $42.60 to $40.75 at the time the sale was announced.

Essentially, Ader asked rhetorically, "Why are they giving cautious guidance four days before they announced a deal ”¦ Something here is not right."

Following the sale announcement, the share price rose to $45.66.

Hayground Cove controls about 1% or 340,000 shares of the outstanding common stock. However, Ader indicated that the company could apply pressure on the Argosy board by acquiring enough shares to raise their ownership to 4.9%.