Why One Fund Dumped $5 Million in Brightstar Lottery Stock — and What It Bought Instead

On Friday, Denver-based 1060 Capital Management reported fully exiting its position in Brightstar Lottery (NYSE: BRSL) during the third quarter, reducing its stake by 307,200 shares for an estimated $4.9 million.

What Happened

According to a filing with the Securities and Exchange Commission (SEC) released on Friday, 1060 Capital sold its entire Brightstar Lottery stake during the third quarter. The sale totaled 307,200 shares, with the position previously representing 9.8% of the fund's 13F AUM as of June 2025.

What Else to Know

Top holdings after the filing:

• NYSE:RSI: $9.2 million (31.3% of AUM)
• NYSE:PRIM: $6.9 million (23.3% of AUM)
• NASDAQ:LULU: $5.3 million (18.1% of AUM)
• NYSE:NVRI: $4.2 million (14.1% of AUM)
• NYSE:MTZ: $2.1 million (7.2% of AUM)

As of Friday, Brightstar Lottery shares were priced at $16.49, down 17% over the past year, and well underperforming the S&P 500, which is up 13% in the same period.

Company Overview

Company Snapshot

Brightstar Lottery is a leading global provider of technology and services to the regulated lottery sector. The company has strategically focused on its core lottery operations, divesting non-core gaming assets to concentrate on scalable, recurring revenue streams. Its competitive advantage lies in its pure-play lottery model, robust technology platform, and established relationships with government and private lottery operators worldwide.

Foolish Take

This sharp reduction in a high-conviction name seems indicative of how a catalyst-driven fund like 1060 Capital is recalibrating risk. The fund, which looks for asymmetric setups with multiple ways to win (per its website), stepping away from Brightstar Lottery during the third quarter suggests that the path to near-term upside looked less compelling than the rest of its increasingly concentrated book. After all, shares of Brightstar have struggled over the past two years and remain about 50% below mid-2023 levels.

There are reasons to be cautious, though there are also bright spots. Brightstar’s third-quarter revenue rose 7% to $629 million, and adjusted EBITDA jumped 11% to $294 million, but the quarter also included negative operating cash flow of $439 million, largely tied to an upfront Italy Lotto license payment, and shares remain down 17% over the past year.

It's important to note that the exit comes in the same quarter that 1060 Capital unwound MYR Group and Armstrong World Industries while rotating into Lululemon and building a sizable Tesla put position, potentially underscoring a broader portfolio pivot rather than a company-specific call. For long-term investors, the takeaway isn’t that Brightstar’s story is necessarily broken—it’s that catalyst-driven funds will redeploy capital once the near-term repricing window narrows, regardless of broader multiyear potential.

Glossary

13F: A quarterly SEC filing by institutional investment managers disclosing their equity holdings.
Assets Under Management (AUM): The total market value of assets a fund or investment manager oversees on behalf of clients.
Full liquidation: Selling an entire investment position, resulting in a zero balance of that asset.
Trailing twelve months (TTM): See TTM.
TTM: The 12-month period ending with the most recent quarterly report.
Dividend yield: Annual dividends per share divided by the share price, expressed as a percentage.
Pure-play: A company focused on a single line of business or industry segment.
Regulated lottery: A lottery operated under government oversight and legal frameworks.
Divested: Sold or disposed of a business unit or asset, often to focus on core operations.
Quarter-end: The last day of a fiscal quarter, often used as a reporting reference point.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lululemon Athletica Inc. The Motley Fool recommends MasTec. The Motley Fool has a disclosure policy.