We recently compiled a list of the 10 Pump and Dump Stocks Favored by Hedge Funds. In this article, we are going to take a look at where Bally’s Corporation (NYSE:BALY) stands against the pump and dump stocks.
Pump and dump stocks are typically characterized by high 52-week volatility, often experiencing rapid price surges followed by sharp declines. While the term “pump and dump” carries a negative connotation, it doesn’t necessarily mean the company is of low quality or incapable of delivering long-term returns – it simply refers to the extreme price fluctuations it exhibits. Traders can profit from these stocks by capitalizing on momentum, buying during the early stages of a price surge, and selling before the inevitable decline. However, timing is crucial, as these stocks can reverse quickly. Risk management, liquidity analysis, and understanding market sentiment are key to navigating these trades successfully. Also, readers should remember that positions in such stocks could exhibit pronounced volatility overnight, and day trading is often the preferrable form of dealing with them.
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Hedge funds gain their information edge through a combination of proprietary research, advanced data analytics, high-frequency trading algorithms, and access to exclusive market insights which are often not accessible to regular investors. Unlike traditional investors, many hedge funds are not focused on long-term value but instead engage in short-term speculation and trading. They may exploit pump and dump stocks by identifying momentum in its early stages, riding the price surge, and exiting just before the downturn (often a moment when the stock gains widespread attention). Some hedge funds even take the opposite approach, shorting these stocks as they peak, profiting from the subsequent decline. Their ability to leverage real-time data, options strategies, and market microstructure analysis gives them a significant advantage over retail traders in volatile market conditions. The key takeaway for readers is that finding “pump and dump” stocks with significant hedge fund ownership could offer unique confirmation for potential short-term trading opportunities, as institutional involvement may indicate informed positioning ahead of major price movements.
Pump and dump stocks become increasingly more attractive during times of pronounced market volatility and uncertainty. Though slightly below the early March peak, the volatility index is still significantly above its moving average and reflects February’s weaker-than-expected batch of economic indicators and investor’s concerns about the likely near-term negative impact of Trump 2.0 policies. Many market participants certainly do not like the tariff turmoil and the shotgun approach in reducing the federal workforce and spending. Several reputable research boutiques, such as Yardeni Research, substantially increased their odds of the US economy entering a recession in 2025. Since the US economy and stock markets work in unison, the year-end targets for the US broad market index were lowered as well. Here’s a snippet for a recent publication from Yardeni Research:
“Vertigo is a sensation of spinning or whirling such that the person or their surroundings appear to be moving. The stock market didn’t do much today, but everything else seemed to be spinning. The epicenter of all this vertigo continues to be the White House. More and more economists are increasing their odds of a recession. We raised ours to 35% a week ago. JP Morgan’s economists raised their odds to 40% today.”
With current market valuations still elevated vs. the previous decade, the risk of a broad market meltdown persists, favoring short-term traders and speculators. Another advantage of engaging in pump-and-dump strategies is the potential to generate profits even in bear markets through short selling and the use of options strategies. However, the downside is that high volatility can work both for and against the trader. Therefore, we advise exercising increased caution when engaging in such strategies.
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Our Methodology
We used Finviz to filter companies that have high 52-week volatility. Then we compared the list with our proprietary database of hedge funds’ holdings, as of Q4 2024 and included in the article the top 10 stocks with the highest hedge fund ownership. It’s important to clarify that calling these companies “pump and dump stocks” does not mean these firms don’t have any solid fundamentals or long-term growth catalysts. We call them pump and dump purely due to their volatility and high risk.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Bally’s Corporation (NYSE:BALY)
Number of Hedge Fund Holders: 21
Bally’s Corporation (NYSE:BALY) is a gaming and entertainment company that owns and operates casinos, racetracks, and online gaming platforms. Its portfolio includes land-based casinos across multiple US states, offering slot machines, table games, and sports betting. BALY also operates iGaming and sports betting through Bally Bet and other digital platforms, expanding its presence in the online gambling market. The company generates revenue from gaming operations, hospitality services, and digital gaming, leveraging its brand and infrastructure to compete in both traditional and online gambling industries. The US-based company ranked 12th on our list of 13 Best Vacation Stocks to Buy Now.
Bally’s Corporation (NYSE:BALY) reported relatively stable third-quarter results for 2024, with revenues declining less than 1% YoY to $630 million. The Casinos & Resorts segment saw a 2% decrease in revenue, while the North America Interactive segment grew by 55%. The company’s UK Interactive business performed strongly, generating a 12% increase in revenues, although the overall International Interactive segment experienced a 5% revenue decline due to non-UK operations. BALY is making progress on several development projects, including the construction of its flagship permanent casino in downtown Chicago, which is expected to open in September 2026.
Bally’s Corporation (NYSE:BALY) is also planning developments in Las Vegas at the Tropicana site and pursuing a casino license in New York. In the North America Interactive segment, Bally’s iGaming operations in Rhode Island are ramping up impressively, contributing $9.7 million in gross gaming revenue. The company’s online sports betting platform, Bally Bet, is now live in 10 markets with plans to expand to additional states. Despite some challenges in specific markets like Rhode Island and Atlantic City, management remains confident in the overall resiliency of their customer base and is implementing efficiency-focused initiatives to enhance profitability. With high stock price volatility in the last 52 weeks and 21 hedge funds owning the stock, BALY is one of the pump and dump stocks favored by hedge funds.
Overall BALY ranks 4th on our list of the 10 pump and dump stocks favored by hedge funds. While we acknowledge the potential of BALY as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BALY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.