If you invest like a poker player, The Stars Group is the perfect stock for you. Its price action makes little fundamental sense and resembles a follow-the-herd type of movement. Shares can go any which way and upper management keeps TSG’s hand close to its chest. It’s hard to tell exactly what cards TSG is holding.

Bullish sentiment sets shares on fire, but then mood sours and a selling avalanche begins for little apparent reason. The bull run from 2016 – 2018 can be explained in the context of the broader recovery in global equities that coincided with the easing of pressure off the Macau VIPs. This got much of the gaming sector moving after the collapse of 2014 and the wider consolidation of 2015. But if you zoom in at TSG’s collapse from highs of $39 last year, there is no clear and obvious reason to explain it other than a change in sentiment.

Last year’s fall in the US indexes began in late September, TSG’s three months beforehand. So its collapse can’t be explained by beta market conditions, or liquidation to raise cash in a broader bear market. Plus, TSG has not participated at all in the massive slingshot rally since late December (that appears to be cooling off now). Shares remain pretty much unchanged while the S&P 500 rocketed 25% higher.

Consider the circumstances of TSG’s collapse last summer. On August 13th, shares plummeted 16%, with analysts looking for post facto explanations that contradicted headlines put out the same day. On the one hand TSG beat revenue and earnings expectations. On the other hand, the market had “higher expectations”. Which one is it? The one thing you could point to that had something to do with TSG’s collapse since last year was dilution throughout the decline. A forced conversion of preferred shares to common shares and the elimination of the rights of preferred shareholders led to a 52.66:1 conversion ratio and the issuance of about 60 million common shares in early June. Another 20 million shares were issued in a public offering two weeks later. Even factoring this in, that the stock could not rally on the back of one of the most powerful short term rallies in the US stock market ever, is a worrying sign.