David Einhorn's DME Capital Management expanded its ownership of regional casino operator Penn Entertainment (NASDAQ: PENN) for the second consecutive quarter.

The hedge fund increased its stake in the gaming company to over 7.5 million shares in the second quarter from roughly 6.3 million shares in the first three months of the year, according to a recent Form 13F filing with the Securities and Exchange Commission (SEC).

During the period of April through June, the money manager added two names to existing positions, including Penn, which is currently the only gaming stock in the DME Capital portfolio. Einhorn made a wise decision, as Penn's stock has increased by 11% in the last ninety days.

In the second quarter, the hedge fund opened two positions and closed two more. Additionally, it decreased its exposure to Peloton Interactive (NASDAQ: PTON). Commentary on why money managers increase, decrease, or remove particular investments is not included in Form 13.

Einhorn didn't back down from the Penn controversy

DME Capital, formerly known as Greenlight Capital, began investing in Penn during the first quarter of 2024. That holding has increased at least three times since DME began investing in the stock at the beginning of last year.

It's interesting to note that DME increased its stake in Penn during the June quarter as the casino operator was embroiled in a proxy war with activist hedge fund HG Vora. Vora advocated for the addition of three directors to Penn's board. Johnny Hartnett and Carlos Ruisanchez were added by the gaming corporation, but William Clifford, who already had connections to Penn, was rejected.

Clifford's nomination is still the subject of legal wrangling, according to Vora, who noted that Penn investors gave him a lot of support during the operator's June shareholder meeting. The heat between Penn and Vora seems to have subsided for the time being.

Casino.org contacted DME Capital earlier this year to inquire about the Penn/Vora incident, but the hedge fund did not reply.

Penn Stock May See Further Gains

Wall Street is warming to the stock, though it's unclear why Einhorn's hedge fund increased its Penn position in the second quarter. At a time when Illinois gaming income is increasing, Penn is expected to benefit from the recent opening of a land-based casino in Joliet, Illinois, and the early 2026 opening of the renovated Aurora, Illinois, site.

Analysts predict increase in earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) due to new projects, even if Penn's ESPN Bet division frequently receives more attention than its regional casinos.

“We believe a ‘normal’ ramp throughout the quarter should allow for an easier setup in 4Q25 for the overall enterprise,” wrote Citizens Equity Research Analyst Jordan Bender in a new report. “Easy comps (no new supply) position the company as one of the more favorable regional gaming companies in the space, in our view, and while online losses subside, we believe PENN’s lease-adjusted leverage will decline to 5.3x by YE26, from 7.0x in 2Q25.”