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Hedge Funds Are Selling Boyd Gaming Corporation (BYD)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Boyd Gaming Corporation (NYSE:BYD) based on that data and determine whether they were really smart about the stock.

Boyd Gaming Corporation (NYSE:BYD) has seen a decrease in hedge fund sentiment recently. Boyd Gaming Corporation (NYSE:BYD) was in 24 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 34. Our calculations also showed that BYD 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

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. 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. 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 website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to take a look at the fresh hedge fund action encompassing Boyd Gaming Corporation (NYSE:BYD).

What have hedge funds been doing with Boyd Gaming Corporation (NYSE:BYD)?

At second quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the previous quarter. On the other hand, there were a total of 30 hedge funds with a bullish position in BYD a year ago. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

The largest stake in Boyd Gaming Corporation (NYSE:BYD) was held by PAR Capital Management, which reported holding $48.5 million worth of stock at the end of September. It was followed by GAMCO Investors with a $30.3 million position. Other investors bullish on the company included Arrowstreet Capital, Point72 Asset Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Diametric Capital allocated the biggest weight to Boyd Gaming Corporation (NYSE:BYD), around 3.45% of its 13F portfolio. PAR Capital Management is also relatively very bullish on the stock, setting aside 1.86 percent of its 13F equity portfolio to BYD.

Due to the fact that Boyd Gaming Corporation (NYSE:BYD) has witnessed a decline in interest from hedge fund managers, it’s easy to see that there exists a select few hedgies that slashed their positions entirely by the end of the second quarter. Interestingly, Parag Vora’s HG Vora Capital Management said goodbye to the biggest stake of all the hedgies tracked by Insider Monkey, totaling an estimated $43.3 million in stock. Ricky Sandler’s fund, Eminence Capital, also cut its stock, about $10.5 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds by the end of the second quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Boyd Gaming Corporation (NYSE:BYD) but similarly valued. These stocks are California Water Service Group (NYSE:CWT), Inspire Medical Systems, Inc. (NYSE:INSP), PacWest Bancorp (NASDAQ:PACW), Compania de Minas Buenaventura S.A.A. (NYSE:BVN), South Jersey Industries Inc (NYSE:SJI), HB Fuller Co (NYSE:FUL), and Focus Financial Partners Inc. (NASDAQ:FOCS). This group of stocks’ market valuations are closest to BYD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CWT 16 54108 0
INSP 24 449227 -1
PACW 24 235216 1
BVN 7 82182 -2
SJI 14 87528 1
FUL 10 140210 -8
FOCS 9 61281 2
Average 14.9 158536 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.9 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $180 million in BYD’s case. Inspire Medical Systems, Inc. (NYSE:INSP) is the most popular stock in this table. On the other hand Compania de Minas Buenaventura S.A.A. (NYSE:BVN) is the least popular one with only 7 bullish hedge fund positions. Boyd Gaming Corporation (NYSE:BYD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BYD is 74.2. 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 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. Hedge funds were also right about betting on BYD as the stock returned 42.5% during Q3 (through September 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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