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Hedge Funds Are Coming Back To Wynn Resorts, Limited (WYNN)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Wynn Resorts, Limited (NASDAQ:WYNN) and determine whether the smart money was really smart about this stock.

Wynn Resorts, Limited (NASDAQ:WYNN) has experienced an increase in activity from the world’s largest hedge funds in recent months. Wynn Resorts, Limited (NASDAQ:WYNN) was in 45 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 50. Our calculations also showed that WYNN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most investors, hedge funds are seen as underperforming, old investment vehicles of years past. While there are more than 8000 funds in operation at the moment, Our researchers choose to focus on the bigwigs of this group, approximately 850 funds. These money managers preside over bulk of all hedge funds’ total capital, and by keeping track of their highest performing stock picks, Insider Monkey has found a few investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Gabriel Plotkin Melvin Capital Management

Gabriel Plotkin of Melvin Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to check out the fresh hedge fund action regarding Wynn Resorts, Limited (NASDAQ:WYNN).

How have hedgies been trading Wynn Resorts, Limited (NASDAQ:WYNN)?

At the end of June, a total of 45 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. By comparison, 39 hedge funds held shares or bullish call options in WYNN a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

The largest stake in Wynn Resorts, Limited (NASDAQ:WYNN) was held by Citadel Investment Group, which reported holding $120 million worth of stock at the end of September. It was followed by Melvin Capital Management with a $104.3 million position. Other investors bullish on the company included Citadel Investment Group, Coatue Management, and Samlyn Capital. In terms of the portfolio weights assigned to each position Rip Road Capital allocated the biggest weight to Wynn Resorts, Limited (NASDAQ:WYNN), around 5.99% of its 13F portfolio. Bronson Point Partners is also relatively very bullish on the stock, designating 5.21 percent of its 13F equity portfolio to WYNN.

As industrywide interest jumped, some big names were breaking ground themselves. Coatue Management, managed by Philippe Laffont, established the most valuable position in Wynn Resorts, Limited (NASDAQ:WYNN). Coatue Management had $64.4 million invested in the company at the end of the quarter. Traci Lerner’s Chescapmanager LLC also initiated a $17.9 million position during the quarter. The following funds were also among the new WYNN investors: Dennis Goldstein’s Rip Road Capital, Andrew Kurita’s Kettle Hill Capital Management, and Eduardo Abush’s Waterfront Capital Partners.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Wynn Resorts, Limited (NASDAQ:WYNN) but similarly valued. These stocks are Guardant Health, Inc. (NASDAQ:GH), Graco Inc. (NYSE:GGG), LKQ Corporation (NASDAQ:LKQ), Entegris Inc (NASDAQ:ENTG), NRG Energy Inc (NYSE:NRG), Globe Life Inc. (NYSE:GL), and Universal Health Services, Inc. (NYSE:UHS). All of these stocks’ market caps match WYNN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GH 36 767641 9
GGG 32 204789 11
LKQ 44 1536917 3
ENTG 28 601485 9
NRG 36 1095466 -2
GL 33 706101 11
UHS 38 446238 8
Average 35.3 765520 7

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.3 hedge funds with bullish positions and the average amount invested in these stocks was $766 million. That figure was $587 million in WYNN’s case. LKQ Corporation (NASDAQ:LKQ) is the most popular stock in this table. On the other hand Entegris Inc (NASDAQ:ENTG) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks Wynn Resorts, Limited (NASDAQ:WYNN) is more popular among hedge funds. Our overall hedge fund sentiment score for WYNN is 87. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and still managed to beat the market by 23.2 percentage points. Hedge funds were also right about betting on WYNN, though not to the same extent, as the stock returned 17.4% since the end of June and outperformed the market as well.

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