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Is It Time to Place Another Bet on Wynn Resorts, Limited (WYNN)?

The government requires hedge funds and wealthy investors with a certain portfolio size to file a report that shows their equity positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on June 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Wynn Resorts, Limited (NASDAQ:WYNN) based on those filings.

There was a 12% decline in hedge fund ownership of Wynn during Q2, as it was held in the 13F portfolios of 44 hedge funds on June 30, down from 50 at the end of March. While overall hedge fund ownership of Wynn declined, the casino operator nonetheless ranked highly among the 25 Stocks Billionaires Are Piling On. Macau’s monthly revenue hit a 4-year high in October, which was a very positive sign for Wynn after months of lagging growth due to weakness in the Chinese stock market. Nonetheless, shares of Wynn are still down by 33% in 2018.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 17.4% year to date and outperformed the market by more than 14 percentage points this year. This strategy also outperformed the market by 3 percentage points in the fourth quarter despite the market volatility (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Lone Pine Capital 2015 Q2 Investor Letter

Let’s take a gander at the latest hedge fund action encompassing Wynn Resorts, Limited (NASDAQ:WYNN).

How are hedge funds trading Wynn Resorts, Limited (NASDAQ:WYNN)?

At Q3’s end, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 12% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WYNN over the last 6 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

WYNN_nov2018

Among these funds, Stephen Mandel’s Lone Pine Capital held the most valuable stake in Wynn Resorts, Limited (NASDAQ:WYNN), which was worth $635.6 million at the end of the second quarter. On the second spot was Egerton Capital Limited which had amassed $375 million worth of shares. Moreover, Criterion Capital, Land & Buildings Investment Management, and Hoplite Capital Management were also bullish on Wynn Resorts, Limited (NASDAQ:WYNN), allocating a large percentage of their 13F portfolios to this stock.

Since Wynn Resorts, Limited (NASDAQ:WYNN) has witnessed a decline in interest from the smart money, logic holds that there were a few hedge funds that decided to sell off their full holdings last quarter. At the top of the heap, Alexander Mitchell’s Scopus Asset Management dumped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, comprising close to $282.7 million in call options. Gabriel Plotkin’s fund, Melvin Capital Management, also sold off its call options, about $240.6 million worth. These moves are interesting, as total hedge fund interest fell by 6 funds during the second quarter.

Let’s now review hedge fund activity in other stocks similar to Wynn Resorts, Limited (NASDAQ:WYNN). These stocks are TransDigm Group Incorporated (NYSE:TDG), Expedia Inc (NASDAQ:EXPE), Credicorp Ltd. (USA) (NYSE:BAP), and Apache Corporation (NYSE:APA). This group of stocks’ market values resemble WYNN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TDG 41 3961067 4
EXPE 38 2865577 -7
BAP 15 839619 -1
APA 17 800696 -6

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $2.12 billion. That figure was $2.19 billion in WYNN’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand Credicorp Ltd. (USA) (NYSE:BAP) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Wynn Resorts, Limited (NASDAQ:WYNN) is more popular among hedge funds, as well as having the support of 10 billionaire money managers. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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