Churchill Downs, Inc. (NASDAQ:CHDN) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late.
If you’d ask most shareholders, hedge funds are perceived as worthless, old investment vehicles of the past. While there are over 8000 funds trading at the moment, we look at the elite of this club, close to 450 funds. It is estimated that this group controls the lion’s share of all hedge funds’ total capital, and by tracking their highest performing picks, we have spotted a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as important, positive insider trading activity is a second way to break down the marketplace. Just as you’d expect, there are a variety of reasons for an insider to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the useful potential of this strategy if piggybackers understand where to look (learn more here).
With these “truths” under our belt, it’s important to take a peek at the recent action encompassing Churchill Downs, Inc. (NASDAQ:CHDN).
What does the smart money think about Churchill Downs, Inc. (NASDAQ:CHDN)?
In preparation for this quarter, a total of 19 of the hedge funds we track held long positions in this stock, a change of 19% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes meaningfully.
Of the funds we track, Paul Reeder and Edward Shapiro’s PAR Capital Management had the largest position in Churchill Downs, Inc. (NASDAQ:CHDN), worth close to $86.7 million, accounting for 2.7% of its total 13F portfolio. Sitting at the No. 2 spot is GAMCO Investors, managed by Mario Gabelli, which held a $63.8 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include George Soros’s Soros Fund Management, Chuck Royce’s Royce & Associates and D. E. Shaw’s D E Shaw.
Now, key money managers have jumped into Churchill Downs, Inc. (NASDAQ:CHDN) headfirst. Millennium Management, managed by Israel Englander, created the largest position in Churchill Downs, Inc. (NASDAQ:CHDN). Millennium Management had 2 million invested in the company at the end of the quarter. Jeffrey Tannenbaum’s Fir Tree also initiated a $0.4 million position during the quarter. The only other fund with a brand new CHDN position is Mike Vranos’s Ellington.
How have insiders been trading Churchill Downs, Inc. (NASDAQ:CHDN)?
Insider purchases made by high-level executives is best served when the company in focus has seen transactions within the past half-year. Over the latest half-year time period, Churchill Downs, Inc. (NASDAQ:CHDN) has experienced 1 unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
With the results exhibited by our strategies, retail investors must always keep an eye on hedge fund and insider trading activity, and Churchill Downs, Inc. (NASDAQ:CHDN) applies perfectly to this mantra.