Hedge Funds Are Cashing Out Of International Game Technology PLC (IGT)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded International Game Technology PLC (NYSE:IGT) based on those filings.

International Game Technology PLC (NYSE:IGT) was in 32 hedge funds’ portfolios at the end of June. The all time high for this statistic is 37. IGT has experienced a decrease in hedge fund interest in recent months. There were 37 hedge funds in our database with IGT holdings at the end of March. Our calculations also showed that IGT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a look at the recent hedge fund action encompassing International Game Technology PLC (NYSE:IGT).

Do Hedge Funds Think IGT Is A Good Stock To Buy Now?

At the end of June, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in IGT over the last 24 quarters. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Joseph Samuels’s Islet Management has the biggest call position in International Game Technology PLC (NYSE:IGT), worth close to $47.9 million, comprising 1.3% of its total 13F portfolio. On Islet Management’s heels is Millennium Management, managed by Israel Englander, which holds a $41.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Renaissance Technologies and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position 1060 Capital Management allocated the biggest weight to International Game Technology PLC (NYSE:IGT), around 20.04% of its 13F portfolio. SCW Capital Management is also relatively very bullish on the stock, designating 6.1 percent of its 13F equity portfolio to IGT.

Judging by the fact that International Game Technology PLC (NYSE:IGT) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of fund managers who were dropping their full holdings last quarter. It’s worth mentioning that Brad Stephens’s Six Columns Capital cut the largest investment of all the hedgies watched by Insider Monkey, worth an estimated $9.9 million in stock, and Stephen Mildenhall’s Contrarius Investment Management was right behind this move, as the fund sold off about $5.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as International Game Technology PLC (NYSE:IGT) but similarly valued. We will take a look at PacWest Bancorp (NASDAQ:PACW), United Bankshares, Inc. (NASDAQ:UBSI), Cirrus Logic, Inc. (NASDAQ:CRUS), Park Hotels & Resorts Inc. (NYSE:PK), AppFolio Inc (NASDAQ:APPF), Selective Insurance Group, Inc. (NASDAQ:SIGI), and The Hanover Insurance Group, Inc. (NYSE:THG). This group of stocks’ market caps match IGT’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $246 million. That figure was $327 million in IGT’s case. PacWest Bancorp (NASDAQ:PACW) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks International Game Technology PLC (NYSE:IGT) is more popular among hedge funds. Our overall hedge fund sentiment score for IGT is 75.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 24.9% in 2021 through October 15th but still managed to beat the market by 4.5 percentage points. Hedge funds were also right about betting on IGT as the stock returned 22.8% since the end of June (through 10/15) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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