Parag Vora founded his hedge fund HG Vora Capital in 2009 and is currently the fund’s portfolio management. Prior to launching his own firm, Mr. Vora served as a senior investment professional at Silver Point Capital, focusing on credit and distressed situations. He joined Silver Point from The Goldman Sachs Group, where he served at the Real Estate Investment Banking division.
Mr. Vora took his experience from Silver Point and Goldman Sachs to HG Vora and for a while his fund was focusing on real estate. In 2014, HG Vora was heavily betting on Real Estate Investment Trusts and then switched to gaming, while lately, the fund has been focusing on communications. Mr. Vora was in the spotlight in 2014 due to his bet on Pinnacle Entertainment Inc (NASDAQ:PNK) and because he formed an activist group with PW Partners Atlas Fund and went after Town Sports International Holdings, Inc. (NASDAQ:CLUB), obtaining several board seats in the process.
The fund’s bets on the aforementioned companies paid off very well last year. We assess the fund’s performance by calculating the weighted average returns in companies with a market cap above $1.0 billion as disclosed in quarterly 13F filings. According to our calculations, HG Vora’s picks returned 71% in 2017. Pinnacle Entertainment Inc (NASDAQ:PNK)’s stock surged by 125.72% last year and the fund closed the stake during the fourth quarter amid the company announcing that it would be acquired by Penn National Gaming, Inc (NASDAQ:PENN) in a $2.8 billion cash-and-stock deal. Back in 2014, Mr. Vora talked about Pinnacle Entertainment Inc (NASDAQ:PNK) during an interview with Bloomberg at the Robin Hood Conference. The investor said at the time that Pinnacle had the potential to reach a free cash flow of around $5 per share in the following five years and could reach $50 per share by 2018. The stock is currently trading at around $30.45 per share, but it still gained over 176% since it moved to NASDAQ in April 2016.
Penn National Gaming, Inc (NASDAQ:PENN), which bought Pinnacle Entertainment Inc (NASDAQ:PNK), had also been a large position in HG Vora’s equity portfolio until the fourth quarter, during which the investor slashed the stake by 69% to 1.83 million shares worth $57.18 million. Penn National Gaming, Inc (NASDAQ:PENN)’s stock also appreciated by 127% during 2017. Town Sports International Holdings, Inc. (NASDAQ:CLUB) is another winning pick in HG Vora’s equity portfolio as it gained 124% last year, but it’s still in the red since April 2014, when the fund initiated its stake.
Following funds like HG Vora can be very useful, since we can imitate some of their stock picks. At Insider Monkey, we have developed a strategy that takes imitating hedge funds to another level, by taking into account the stock picks of some of the best-performing hedge funds. Our methodology identifies the best small-cap stocks that the best-performing hedge funds are collectively bullish on and this approach has helped us beat the market by over 20 percentage points since the strategy was launched in May 2014. In our quarterly newsletters we share the stock picks from our small-cap strategy. In addition, we also have a monthly activist newsletter that focuses on one activist fund each month and presents the best ways to imitate it.
With this in mind, let’s take a closer look at HG Vora’s equity portfolio and some of its stock picks