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Blue Star Capital (AIM:BLU) is one of the hottest AIM-listed stocks right now, but what has been driving all the buying activity in the second half of this year? AS our AIM specialist Tony Cross noted at the end of last week, there’s no news to support the big gains at the end of last week (+20% for the stock).

Blue Star Capital is a specialist, AIM-listed company that is focusing on the technology / e-sports investment arena. We have previously flagged up e-sports as a fast moving and very interesting area for investors to look at, both during the pandemic, and indeed going into 2022.

The company is led by Vancouver-based Derek Lew, who is also president and CEO of venture capital firm GrowthWorks Capital. He also used to be chair of Innovate BC.

Investors will recall the company listed in London in November 2019, with a portfolio of six e-sports businesses under its belt. Among these were Guild Esports, which it co-owns with David Beckham (yes, that David Beckham) and Dynasty Esports. Blue Star Capital has made follow on investments in these companies since it listed, as well as picking up a 9% stake in Formation.

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Each of the companies Blue Star Capital is backing in the esports area is active in building a gaming franchise which has the capacity to derive revenues from a range of sources, among them tournament winnings, digital marketing opportunities, sponsorship, membership, merchandise and promotional tours. Each company has also been selected because it enjoys a presence in a different part of the world – e.g. Guild Esports has a bias toward Europe while Dynasty Esports is strong in Southeast Asia.

Is Blue Star Capital a pure e-gaming investor?

It should be noted that Blue Star Capital is not a pure e-gaming venture – it has also acquired stakes in some other companies in the tech area, including Sthaler (a developer of finger touch consumer identification technology) and SatoshiPay, a blockchain-based digital payments specialist.

Enthusiasm for the company is obvious – there are few strong e-gaming plays on AIM at the moment, hence investors are looking towards Blue Star Capital as a good bundled portfolio of fast moving businesses in this area.

Recent excitement was generated by Guild Esports recently when it announced Argentinian FIFA specialist Nicolas Villalba to its roster of FIFA players. He is one of Argentina’s highest earning e-gamers with over $290,000 earned to date in his gaming career.

Villalba currently plays for Swiss-based FC Basel 1893 E-sports and has signed a one year contract with Guild, with the option of extending it for another year.

Global e-gaming market is growing fast

Insider Intelligence estimates that there will be a staggering 26m monthly e-sports viewers in the USA this year. This is forecast to be over 31m in 2023. Part of the growth in North America is being attributed to endorsements like big celebrities (e.g. Michael Jordan) and to the success of Fortnite.

The industry is already seeing growing interest from venture capital and private equity firms, and Statista also estimates that global revenue from the industry will have topped $1.6bn in 2024.

We think the story has legs and a good way to tip a toe in the water is via an investment company that can take stakes in the faster growing opportunities in the market, many of which will be unlisted and hard to get into otherwise.

Investors should note the high levels of volatility in the Blue Star Capital share price recently; the company has a market cap of £12m, so it is very easy for big trades to move that share price fast.

Related

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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