International Game Technology PLC (IGT) Fell Out Of Favor With Hedge Funds

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 International Game Technology PLC (NYSE:IGT) and determine whether the smart money was really smart about this stock.

International Game Technology PLC (NYSE:IGT) has seen a decrease in support from the world’s most elite money managers of late. International Game Technology PLC (NYSE:IGT) was in 23 hedge funds’ portfolios at the end of June. The all time high for this statistics is 37. Our calculations also showed that IGT 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.


Cliff Asness of AQR Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, 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 lithium company which could also benefit from the electric car adoption. 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. Now let’s take a glance at the new hedge fund action regarding International Game Technology PLC (NYSE:IGT).

Hedge fund activity in International Game Technology PLC (NYSE:IGT)

At second quarter’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in IGT a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is IGT A Good Stock To Buy?

More specifically, Renaissance Technologies was the largest shareholder of International Game Technology PLC (NYSE:IGT), with a stake worth $24.3 million reported as of the end of September. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $21.2 million. Arrowstreet Capital, Millennium Management, and Intrinsic Edge Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Proxima Capital Management allocated the biggest weight to International Game Technology PLC (NYSE:IGT), around 2.81% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, designating 1.6 percent of its 13F equity portfolio to IGT.

Judging by the fact that International Game Technology PLC (NYSE:IGT) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of hedge funds that slashed their positions entirely by the end of the second quarter. At the top of the heap, John R. Wagner’s SCW Capital Management cut the biggest position of the “upper crust” of funds watched by Insider Monkey, valued at about $3.3 million in stock, and Benjamin A. Smith’s Laurion Capital Management was right behind this move, as the fund dumped about $0.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds by the end of the second quarter.

Let’s check out hedge fund activity in other stocks similar to International Game Technology PLC (NYSE:IGT). We will take a look at Olin Corporation (NYSE:OLN), Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB), Uniti Group Inc. (NASDAQ:UNIT), Immunovant, Inc. (NASDAQ:IMVT), PQ Group Holdings Inc. (NYSE:PQG), SpringWorks Therapeutics, Inc. (NASDAQ:SWTX), and American Eagle Outfitters Inc. (NYSE:AEO). All of these stocks’ market caps resemble IGT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OLN 33 448219 0
OMAB 4 34250 0
UNIT 17 79043 4
IMVT 31 330242 3
PQG 6 46807 -1
SWTX 15 754975 1
AEO 36 519270 10
Average 20.3 316115 2.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.3 hedge funds with bullish positions and the average amount invested in these stocks was $316 million. That figure was $97 million in IGT’s case. American Eagle Outfitters Inc. (NYSE:AEO) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB) is the least popular one with only 4 bullish hedge fund positions. International Game Technology PLC (NYSE:IGT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IGT is 51.3. 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 24.8% in 2020 through the end of third quarter and still beat the market by 19.3 percentage points. Hedge funds were also right about betting on IGT as the stock returned 25.1% during Q3 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.