About six weeks ago, I was looking at my position in $PENN, realizing I was more overweight than I was comfortable with, and also realizing that 10% of my shares represented like 75% of my total losses. I wanted to buy cheaper shares (it was trading at $23 at the time) and replace those higher priced shares. Lower my overall CB, lock in the tax loss, continue the position for the long haul.

This week I was supposed to execute that strategy, free of the wash sale rules and post-earnings (I expected we were at/near a bottom). Maybe it's not an optimal use of cash, or an optimal strategy, but I had convinced myself it was the best move for my position at the time. Then they pulled the trigger on the deal with ESPN, and I discussed earlier this week the struggle I was facing regarding my position going forward, as a lot of my thesis was centered around a Barstool/PENN collab competing with $DKNG and FanDuel (see that writeup here: https://commonstock.com/post/123d42c4-0b56-486c-8f7d-8d7085add0fc)

Ultimately, I decided it was best to stick to the strategy I laid out for myself and sold those expensive shares, lowering my overall CB and lightening my position slightly. The surprising turn of events for me, was that I reallocated almost all of those funds into $DKNG - they were always a small piece of my portfolio, but management has seemed to be consistent in their strategy and successful, and owns a signficant piece of the sports betting landscape at this point. The Penn/ESPN deal reeks of a little desperation on both sides (ESPN knew they needed a hand in sports betting, Penn knew they needed a better branding partner to get any sort of decent market share).

I haven't sold all of my Penn, as I like the CEO and think his strategy is right (even if he got the partner wrong the first time, and gave Barstool back for $1), but they have their own in-house betting tech stack, and now are partnered with the largest sports media company in the US and own the largest sports media company in Canada; long term, maybe they overpaid for the ESPN deal (see Iger's quote below from their earnings yesterday), but they had no choice - they were about to be just another irrelevant sportsbook.

If they can parlay the ESPN brand into a larger market share, and continue their road to profitability, the stock should do okay long term. But if it pops back to $30+ in the near future, you might see me head for the exits, or at least significantly pare down - it's not one of my five best ideas, so it shouldn't be one of my five largest positions. Stay tuned for the next update of my gambling stocks!