The Ainsworth Game Technology Limited (ASX: AGI) share price performed exceptionally well today, closing the session up 10.96% to 81 cents. Ainsworth shares had closed at 75 cents each on Friday afternoon, but opened at 80 cents apiece this morning, a level around which they essentially revolved all day.
This latest move in the Ainsworth share price caps off what has been an especially pleasing few months for shareholders. Back in early November 2020, Ainsworth shares were trading for 28 cents each. That means at today's prices, the shares are up 189% since then. However, they are also still down 25% from the peak of $1.08 per share we saw at the end of last month.
So what is Ainsworth Game Technology? And why were Ainsworth shares shooting higher today?
What does the company do?
Ainsworth Game Technology is a gaming company established in 1995. It was founded by Len Ainsworth. Mr Ainsworth was also the founder of the ASX's most prominent gaming manufacturer, Aristocrat Leisure Ltd (ASX: ALL).
Like Aristocrat, Ainsworth also manufactures poker machines. It has facilities that enable the design, development and testing of these machines. The company also offers services such as installation, maintenance/servicing and support.
Ainsworth supplies markets as diverse as Europe, North America and Latin America, as well as Australia and Australasia.
Ainsworth has had a rough year due to the coronavirus pandemic effectively shuttering gambling institutions around the world. Last month, the company announced it was expecting to report a net loss before tax of $14 million for the six months ending 31 December 2020.
However, on the same day, the company also announced it had established a new, secured credit facility with the US-based Western Alliance Bancorporation. Investors were evidently pleased with that announcement, given Ainsworth shares rose 15% that day.
What fuelled the Ainsworth Game Technology share price today?
Something very interesting was certainly happening with this company today. On Friday last week, after market close, we had an announcement from S&P Global. S&P Global is the company that administers the S&P/ASX 200 Index (ASX: XJO) and the other major indexes on the ASX. In this announcement, S&P reported that Ainsworth would be removed from the All Ordinaries Index (ASX: XAO).
Normally when a company is removed from an index, it causes a selloff from investors. We covered some of the winners and losers from the ASX 200's rebalancing this morning in fact. But the opposite has happened today, so this is strange indeed.
Unlike the ASX 200, the All Ordinaries is not an index that is widely covered and tracked by exchange-traded funds (ETFs). So that could be behind this situation.
But we could also just be seeing some price discovery here. Last week, Ainsworth fell by around 10% between Wednesday and Friday to an intra-week low of 74 cents per share. That was before the rebalancing became public knowledge. Perhaps investors have simply decided that price was too low, and have been bidding up the company accordingly.
ASX data does show that trading volumes today were significantly above the company's 5-day average.
Whatever the reason for today's Ainsworth share price moves, investors will no doubt be pleased. At the current share price, Ainsworth has a market capitalisation of around $245 million.