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Why You Should Get Hyped About Churchill Downs, Inc. (CHDN), Cypress Semiconductor Corporation (CY), & Two More Stocks

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At Insider Monkey, we believe that an investor can beat the market by following the moves of big hedge funds into the top picks they are bullish on. We track 750+ hedge funds, and among them is Three Bays Capital, managed by Matthew Sidman. In this article we are going to take a look at four companies from its equity portfolio, which helped it deliver positive returns in the third quarter, including Churchill Downs, Inc. (NASDAQ:CHDN)Cypress Semiconductor Corporation (NASDAQ:CY), Intercontinental Exchange Inc (NYSE:ICE), and Sensata Technologies Holding N.V. (NYSE:ST).

At the end of June, Three Bays Capital’s public equity portfolio was valued at $1.92 billion. The fund’s 13 long positions in companies that were worth at least $1 billion at the end of June delivered a return of 15.54% in the quarter, easily outpacing the retruns of the market. Although this way of calculating the fund’s returns is different from its actual returns, because we exclude positions in small-cap companies, and some other instruments, it still provides us with a good way for examining the hedge fund’s investment expertise in long positions.

That being said, let’s examine the third quarter performances of the aforementioned companies.

lassedesignen/Shutterstock.com

lassedesignen/Shutterstock.com

The first stock we are going to look at is racing, online entertainment, and gaming company, Churchill Downs, Inc. (NASDAQ:CHDN). During the second quarter, Three Bays Capital raised its stake in the company by 18% to 1.63 million shares, which were worth $205.59 million at the end of June. Boosting the stake was a good move for the fund, since the company advanced by 15.8% in the next three months.

At the end of the second quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a 33% slide from the previous quarter. One of the largest stakes in the company was reported by Paul Reeder and Edward Shapiro’s PAR Capital Management, which held a $179.3 million position. Other professional money managers that held long positions comprised Dmitry Balyasny’s Balyasny Asset Management, Mario Gabelli’s GAMCO Investors, and George Soros’ Soros Fund Management.

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Three Bays Capital made no change to its position in Cypress Semiconductor Corporation (NASDAQ:CYin the second quarter, continuing to hold 15.86 million shares of the stock, which comprised 8.71% of its portfolio’s value at the close of the second quarter. The stock delivered a positive return of 16.4% in the third quarter, while on a year-to-date basis it has advanced by 7.54%.

At the end of the second quarter, a total of 25 of the hedge funds that we follow held long positions in this stock, a jump of 92% from one quarter earlier. Among investors bullish on the company were OZ Management, GAMCO Investors, and Renaissance Technologies.

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We’ll check out two more of the fund’s stock picks on the next page.

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