We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards VICI Properties Inc. (NYSE:VICI).
Is VICI stock a buy or sell? VICI Properties Inc. (NYSE:VICI) investors should be aware of a decrease in activity from the world’s largest hedge funds of late. VICI Properties Inc. (NYSE:VICI) was in 38 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 59. There were 40 hedge funds in our database with VICI positions at the end of the third quarter. Our calculations also showed that VICI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 124 percentage points since March 2017 (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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. With all of this in mind let’s take a look at the new hedge fund action regarding VICI Properties Inc. (NYSE:VICI).
Do Hedge Funds Think VICI Is A Good Stock To Buy Now?
At the end of December, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the previous quarter. The graph below displays the number of hedge funds with bullish position in VICI over the last 22 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Gates Capital Management held the most valuable stake in VICI Properties Inc. (NYSE:VICI), which was worth $103.8 million at the end of the fourth quarter. On the second spot was Canyon Capital Advisors which amassed $96.9 million worth of shares. D E Shaw, Pentwater Capital Management, and Citadel Investment Group 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 Hein Park Capital allocated the biggest weight to VICI Properties Inc. (NYSE:VICI), around 11.02% of its 13F portfolio. Parsifal Capital Management is also relatively very bullish on the stock, earmarking 9.92 percent of its 13F equity portfolio to VICI.
Judging by the fact that VICI Properties Inc. (NYSE:VICI) has experienced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there were a few funds that slashed their full holdings in the fourth quarter. Interestingly, Steve Cohen’s Point72 Asset Management said goodbye to the biggest investment of all the hedgies followed by Insider Monkey, comprising an estimated $28.7 million in stock. Ricky Sandler’s fund, Eminence Capital, also dumped its stock, about $26.7 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 2 funds in the fourth quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as VICI Properties Inc. (NYSE:VICI) but similarly valued. These stocks are Principal Financial Group Inc (NASDAQ:PFG), Eastman Chemical Company (NYSE:EMN), Discovery Inc. (NASDAQ:DISCA), Crown Holdings, Inc. (NYSE:CCK), Brookfield Property Partners LP (NASDAQ:BPY), Brown & Brown, Inc. (NYSE:BRO), and ON Semiconductor Corporation (NASDAQ:ON). All of these stocks’ market caps are similar to VICI’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $692 million. That figure was $970 million in VICI’s case. Crown Holdings, Inc. (NYSE:CCK) is the most popular stock in this table. On the other hand Brookfield Property Partners LP (NASDAQ:BPY) is the least popular one with only 9 bullish hedge fund positions. VICI Properties Inc. (NYSE:VICI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VICI is 49.2. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on VICI as the stock returned 9.9% since the end of Q4 (through 3/19) 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.