Did Hedge Funds Drop The Ball On Golden Entertainment Inc (GDEN) ?

“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Golden Entertainment Inc (NASDAQ:GDEN) in order to identify whether reputable and successful top money managers continue to believe in its potential.

Golden Entertainment Inc (NASDAQ:GDEN) was in 12 hedge funds’ portfolios at the end of the third quarter of 2019. GDEN has seen an increase in enthusiasm from smart money of late. There were 11 hedge funds in our database with GDEN positions at the end of the previous quarter. Our calculations also showed that GDEN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s view the fresh hedge fund action surrounding Golden Entertainment Inc (NASDAQ:GDEN).

How have hedgies been trading Golden Entertainment Inc (NASDAQ:GDEN)?

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in GDEN a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is GDEN A Good Stock To Buy?

The largest stake in Golden Entertainment Inc (NASDAQ:GDEN) was held by Nantahala Capital Management, which reported holding $32.6 million worth of stock at the end of September. It was followed by Indaba Capital Management with a $12.5 million position. Other investors bullish on the company included Bridger Management, Renaissance Technologies, and 1060 Capital Management. In terms of the portfolio weights assigned to each position 1060 Capital Management allocated the biggest weight to Golden Entertainment Inc (NASDAQ:GDEN), around 13.53% of its 13F portfolio. Indaba Capital Management is also relatively very bullish on the stock, dishing out 2.93 percent of its 13F equity portfolio to GDEN.

As aggregate interest increased, key hedge funds have been driving this bullishness. Intrinsic Edge Capital, managed by Mark Coe, established the most valuable position in Golden Entertainment Inc (NASDAQ:GDEN). Intrinsic Edge Capital had $3.6 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $1.3 million investment in the stock during the quarter.

Let’s also examine hedge fund activity in other stocks similar to Golden Entertainment Inc (NASDAQ:GDEN). These stocks are Tuniu Corporation (NASDAQ:TOUR), Intelligent Systems Corporation (NYSE:INS), Surgery Partners, Inc. (NASDAQ:SGRY), and Home Bancorp, Inc. (NASDAQ:HBCP). This group of stocks’ market caps match GDEN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TOUR 3 21391 -1
INS 7 99921 0
SGRY 12 31532 1
HBCP 5 10676 3
Average 6.75 40880 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $76 million in GDEN’s case. Surgery Partners, Inc. (NASDAQ:SGRY) is the most popular stock in this table. On the other hand Tuniu Corporation (NASDAQ:TOUR) is the least popular one with only 3 bullish hedge fund positions. Golden Entertainment Inc (NASDAQ:GDEN) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on GDEN as the stock returned 36.3% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.