Is Ameristar Casinos, Inc. (NASDAQ:ASCA) a buy?
Now, according to many market players, hedge funds are seen as useless, old investment vehicles of a period lost to current times. Although there are over 8,000 hedge funds trading in present day, Insider Monkey looks at the upper echelon of this club, around 525 funds. Analysts calculate that this group oversees the majority of the smart money's total capital, and by monitoring their highest performing investments, we've unsheathed a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as necessary, positive insider trading activity is a second way to look at the marketplace. As the old adage goes: there are plenty of reasons for an insider to downsize shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the valuable potential of this strategy if shareholders know where to look (learn more here).
Thus, we're going to examine the recent info for Ameristar Casinos, Inc. (NASDAQ:ASCA).
At Q2's end, a total of 22 of the hedge funds we track held long positions in this stock, a change of -15% from one quarter earlier. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully.
According to our 13F database, PAR Capital Management, managed by Paul Reeder and Edward Shapiro, holds the most valuable position in Ameristar Casinos, Inc. (NASDAQ:ASCA). PAR Capital Management has a $55.5 million position in the stock, comprising 1.6% of its 13F portfolio. On PAR Capital Management's heels is Cliff Asness of AQR Capital Management, with a $45.4 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include Robert Emil Zoellner's Alpine Associates, Matthew Halbower's Pentwater Capital Management and Nick Niell's Arrowgrass Capital Partners.
Since Ameristar Casinos, Inc. (NASDAQ:ASCA) has faced declining interest from the entirety of the hedge funds we track, it's safe to say that there were a few funds that decided to sell off their full holdings heading into Q2. It's worth mentioning that Daniel S. Och's OZ Management dumped the biggest position of the 450+ funds we monitor, totaling about $12.9 million in stock, and Don Morgan of Brigade Capital was right behind this move, as the fund said goodbye to about $9.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds heading into Q2.
Bullish insider trading is best served when the company in focus has experienced transactions within the past 180 days. Over the last half-year time period, Ameristar Casinos, Inc. (NASDAQ:ASCA) has seen zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
We'll go over the relationship between both of these indicators in other stocks similar to Ameristar Casinos, Inc. (NASDAQ:ASCA). These stocks are The Marcus Corporation (NYSE:MCS), Caesars Entertainment Corp (NASDAQ:CZR), Marriott Vacations Worldwide Corp (NYSE:VAC), Boyd Gaming Corporation (NYSE:BYD), and Pinnacle Entertainment, Inc (NYSE:PNK). All of these stocks are in the resorts & casinos industry and their market caps are similar to ASCA's market cap.