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

Mr. Vora also said  during his interview that Pinnacle Entertainment, Inc (NYSE:PNK) was an interesting investment, because the company can reach a free cash flow of around $5 per share in the next five years. Moreover, Pinnacle made a successful and profitable acquisition of Ameristar Casinos in 2013, for $2.8 billion, which was financed with a low-cost debt, Mr. Vora also said. Overall, the investor expects the stock to reach around $50 per share within the next four years.

Mr. Vora might be right on money with his bet on Pinnacle Entertainment, Inc (NYSE:PNK). Last year, another investor supported his views on the company and went activist on Pinnacle Entertainment. Daniel Lewiss’ Orange Capital, which owns around 2.58 million shares, urged the company in April to spin-off its real estate into an independent publicy traded real estate investment trust. In November, 2014, the company announced its plans to pursue a tax-free transaction that will involve distributing the shares of the newly formed REIT to the shareholders of Pinnacle Entertainment.

Aside from HG Vora and Orange Capital, several other investors are betting on Pinnacle Entertainment, Inc (NYSE:PNK). In the previous round of 13F filings, 32 funds among those that we track reported holding long positions in the company at the end of September, versus 24 funds in the previous quarter. Overall, these funds own $602.82 million worth of Pinnacle stock, up by $66.73 million on the quarter. Roberto Mignone’s Bridger Management is another shareholder of the company with 2.27 million shares as of the end of September.

Another stock in HG Vora’s equity portfolio that is worth mentioning is Town Sports International Holdings, Inc. (NASDAQ:CLUB). Even though the holding is only the ninth largest and contains around 3.88 million shares, which represent less than 3% of the fund’s equity portfolio at the end of September, the investment is interesting, because it is one of the few activist positions disclosed by HG Vora. Mr. Vora added Town Sports International Holdings, Inc. (NASDAQ:CLUB) to his equity portfolio at the end of April, and throughout the last year, the stake has been raised from 1.30 million shares held initially. Moreover, the fund went activist on the company in October and formed an activist group with PW Partners Atlas Fund. In the latest development, the activist group nominated six independent directors to be elected to the board of Town Sports International.

Meanwhile, the stock of the owner and operator of fitness clubs Town Sports International Holdings, Inc. (NASDAQ:CLUB) slid by around 18% since HG Vora initiated its stake. In this way, in order to maximize the shareholder value, other investors are likely to support the crusade of the activist group that seeks changes at the company.

Farallon Capital is one of the funds that owns a significant position in Town Sports International Holdings, Inc. (NASDAQ:CLUB), reporting ownership of 4.06 million shares in its latest 13F filing.

Disclosure: none