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International Game Technology PLC (IGT): Hedge Funds Losing Interest

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 first 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 4.5 years and analyze what the smart money thinks of International Game Technology PLC (NYSE:IGT) based on that data.

International Game Technology PLC (NYSE:IGT) shareholders have witnessed a decrease in hedge fund interest lately. Our calculations also showed that IGT isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a gander at the latest hedge fund action encompassing International Game Technology PLC (NYSE:IGT).

How have hedgies been trading International Game Technology PLC (NYSE:IGT)?

At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IGT over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in International Game Technology PLC (NYSE:IGT) was held by Renaissance Technologies, which reported holding $13 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $7.7 million position. Other investors bullish on the company included Millennium Management, AQR Capital Management, and Alden Global Capital. In terms of the portfolio weights assigned to each position SCW Capital Management allocated the biggest weight to International Game Technology PLC (NYSE:IGT), around 2.95% of its 13F portfolio. Proxima Capital Management is also relatively very bullish on the stock, dishing out 2.81 percent of its 13F equity portfolio to IGT.

Judging by the fact that International Game Technology PLC (NYSE:IGT) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedge funds that elected to cut their entire stakes last quarter. It’s worth mentioning that Robert Pohly’s Samlyn Capital dropped the biggest stake of all the hedgies monitored by Insider Monkey, worth an estimated $70.6 million in stock. Paul Reeder and Edward Shapiro’s fund, PAR Capital Management, also said goodbye to its stock, about $20.4 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 5 funds last quarter.

Let’s check out 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 Helios Technologies, Inc. (NASDAQ:HLIO), State Auto Financial Corporation (NASDAQ:STFC), Nu Skin Enterprises, Inc. (NYSE:NUS), and SPX FLOW, Inc. (NYSE:FLOW). This group of stocks’ market values match IGT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HLIO 4 53242 -2
STFC 6 8352 1
NUS 18 111349 -4
FLOW 15 117620 -1
Average 10.75 72641 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $56 million in IGT’s case. Nu Skin Enterprises, Inc. (NYSE:NUS) is the most popular stock in this table. On the other hand Helios Technologies, Inc. (NASDAQ:HLIO) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks International Game Technology PLC (NYSE:IGT) is more popular among hedge funds. 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 returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on IGT as the stock returned 66.6% so far in Q2 (through June 10th) 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.