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American Realty Capital Properties Inc (ARCP), Pinnacle Entertainment, Inc (PNK): Is Parag Vora Right Betting on REITs?

Parag Vora is a name that has been heard on many occasions on Wall Street in the last couple of years. His fund, HG Vora Capital Management, with an equity portfolio of around $880, has been betting on real estate investment trusts. One of Vora’s holdings is Pinnacle Entertainment, Inc (NYSE:PNK), which the investor has been bullish on since 2013. More importantly, Mr. Vora is also taking an activist approach towards another company, Town Sports International Holdings, Inc. (NASDAQ:CLUB).

Parag Vora - HG Vora Capital

In an interview with Bloomberg at the Robin Hood conference in November, Mr. Vora explained why he likes real estate companies. A significant portion of HG Vora’s equity portfolio is concentrated in real estate investment trusts and the investor considers them to be significantly undervalued, with many high-quality companies losing 20-25% of their stock price in the last year.

HG Vora Capital’s latest 13F reveals that the fund’s largest position in its equity portfolio is held by American Realty Capital Properties Inc (NASDAQ:ARCP), a commercial real estate investment trust. However, the stock declined by more than 30% since the first quarter of 2014, when the company was added to the fund’s equity portfolio. The fund however, still remains optimistic on American Realty Capital Properties Inc (NASDAQ:ARCP) to rebound, since it has increased its exposure to the company throughout the first nine months of last year. In this way, at the end of September, HG Vora held 12.35 million shares of American Realty Capital Properties Inc (NASDAQ:ARCP), up from 4.60 million shares held initially.

Next on the list is Pinnacle Entertainment, Inc (NYSE:PNK), which, as it was mentioned earlier, has been longer in the fund’s equity portfolio. Even though, HG Vora owns a passive stake in the company, that contains 5.50 million shares as of the end of September, Mr. Vora has talked about this investment on several occasions.