World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) investors should pay attention to a decrease in hedge fund sentiment lately. MPEL was in 22 hedge funds’ portfolios at the end of September. There were 23 hedge funds in our database with MPEL positions at the end of the previous quarter. At the end of this article we will also compare MPEL to other stocks including Alleghany Corporation (NYSE:Y), Global Payments Inc (NYSE:GPN), and Sabre Corp (NASDAQ:SABR) to get a better sense of its popularity.
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Now, let’s take a look at the latest action regarding Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL).
How are hedge funds trading Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL)?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, holds the biggest position in Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL). Scopia Capital has a $107.7 million position in the stock, comprising 2.3% of its 13F portfolio. The second largest stake is held by Daniel S. Och of OZ Management, with a $45.6 million position; 0.2% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish consist of Matt Sirovich and Jeremy Mindich’s Scopia Capital, Brett Barakett’s Tremblant Capital and Ken Griffin’s Citadel Investment Group.
Intriguingly, Daniel S. Och’s fund, OZ Management dumped its call options, about $9.8 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) but similarly valued. We will take a look at Alleghany Corporation (NYSE:Y), Global Payments Inc (NYSE:GPN), Sabre Corp (NASDAQ:SABR), and News Corp (NASDAQ:NWS). This group of stocks’ market valuations are closest to MPEL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| Y | 30 | 865434 | -3 |
| GPN | 27 | 549604 | 4 |
| SABR | 34 | 848653 | -1 |
| NWS | 15 | 402772 | -5 |
As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $667 million. That figure was $320 million in MPEL’s case. Sabre Corp (NASDAQ:SABR) is the most popular stock in this table. On the other hand News Corp (NASDAQ:NWS) is the least popular one with only 15 bullish hedge fund positions. Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SABR might be a better candidate to consider a long position.
