Hedge Funds Aren’t Crazy About Pinnacle Entertainment, Inc (PNK) Anymore

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Pinnacle Entertainment, Inc (NYSE:PNK) was in 15 hedge funds’ portfolio at the end of the first quarter of 2013. PNK has seen a decrease in enthusiasm from smart money lately. There were 17 hedge funds in our database with PNK positions at the end of the previous quarter.

Pinnacle Entertainment, Inc (NYSE:PNK)

To most investors, hedge funds are seen as underperforming, old financial vehicles of years past. While there are over 8000 funds in operation at the moment, we look at the crème de la crème of this group, close to 450 funds. It is widely believed that this group controls most of the hedge fund industry’s total asset base, and by watching their best picks, we have spotted a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as key, optimistic insider trading sentiment is a second way to parse down the financial markets. Just as you’d expect, there are a variety of incentives for an insider to cut shares of his or her company, but just one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this strategy if shareholders understand what to do (learn more here).

Now, let’s take a look at the key action encompassing Pinnacle Entertainment, Inc (NYSE:PNK).

What does the smart money think about Pinnacle Entertainment, Inc (NYSE:PNK)?

At the end of the first quarter, a total of 15 of the hedge funds we track were long in this stock, a change of -12% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings significantly.

According to our comprehensive database, Abby Flamholz and Yehuda Blinder’s ADAR Investment Management had the largest position in Pinnacle Entertainment, Inc (NYSE:PNK), worth close to $21 million, accounting for 4.9% of its total 13F portfolio. On ADAR Investment Management’s heels is Citadel Investment Group, managed by Ken Griffin, which held a $19.7 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Mario Gabelli’s GAMCO Investors, Alexander Mitchell’s Scopus Asset Management and Paul Reeder and Edward Shapiro’s PAR Capital Management.

Because Pinnacle Entertainment, Inc (NYSE:PNK) has faced bearish sentiment from the smart money, it’s easy to see that there lies a certain “tier” of fund managers that decided to sell off their entire stakes in Q1. It’s worth mentioning that Mariko Gordon’s Daruma Asset Management sold off the biggest stake of the 450+ funds we key on, comprising about $41.3 million in stock., and Eliav Assouline and Marc Andersen of Axial Capital was right behind this move, as the fund cut about $19.2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds in Q1.

Insider trading activity in Pinnacle Entertainment, Inc (NYSE:PNK)

Bullish insider trading is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the last six-month time period, Pinnacle Entertainment, Inc (NYSE:PNK) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Pinnacle Entertainment, Inc (NYSE:PNK). These stocks are The Marcus Corporation (NYSE:MCS), Caesars Entertainment Corp (NASDAQ:CZR), Marriott Vacations Worldwide Corp (NYSE:VAC), Boyd Gaming Corporation (NYSE:BYD), and Ameristar Casinos, Inc. (NASDAQ:ASCA). This group of stocks belong to the resorts & casinos industry and their market caps are similar to PNK’s market cap.

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