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Luxor Capital Group Raises Passive Stake in Stabilizing Zynga Inc (ZNGA) To 5.1%

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Luxor Capital Group, led by Christian Leone, has increased its stake in Zynga Inc (NASDAQ:ZNGA), a new filing with the U.S. Securities and Exchange Commission shows. The stake was raised to 39.86 million shares from 19.15 million shares the fund reported holding in its latest 13F filing, for the reporting period of March 31. The stake is passive by nature, and equates to 5.1% of the company’s class A common stock. Zynga Inc (NASDAQ:ZNGA) is a developer of video games, headquartered in San Francisco, California.

Christian Leone

New York-based hedge fund Luxor Capital has an estimated $3 billion in assets under management (AUM). Founded in 2002, the fund has a relatively balanced structure, with holdings in equity and fixed income investments throughout the world. Luxor Capital uses a value-based approach to choose stocks, and the investor has a penchant for distressed companies. As of March 31, Luxor Capital’s public equity portfolio had a value of $6.19 billion.

Christian Leone
Christian Leone
Luxor Capital Group

We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 80 percentage points (135% return vs. S&P 500’s 55% gain) over the last 34 months (see the details here).

Zynga Inc (NASDAQ:ZNGA) is a developer of social games, with a market cap of $2.28 billion. The California-based company has developed online games, such as FarmVille, Zynga Casino, and Words With Friends. Shares of Zynga Inc (NASDAQ:ZNGA)’s stock have declined by 8.82% year-to-date (YTD), compared to robust gains of  26.91% for the industry.

Zynga Inc (NASDAQ:ZNGA) was able to narrow its net loss for the first quarter of 2015 to $46.50 million, versus $61.18 million in the same quarter of 2014. Net loss per share was $0.05, versus a loss of $0.07 per share in the year-ago quarter. Revenue for the quarter was $183.29 million, up from $168.02 million in the same quarter last year. Its bookings for the quarter increased to $167 million, compared to the same quarter of 2014. For the second quarter of 2015, Zynga Inc (NASDAQ:ZNGA) expects its net loss to be in the range of $50 million to $54 million, and revenue to be in the range of $175 million to $190 million. Bookings are estimated to be in the range of $145 million to $160 million.

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