Pinnacle Entertainment, Inc (PNK): Parag Vora’s Bet on Real Estate Pays Off Big Time

Pinnacle has been among the largest stakes in HG Vora’s equity portfolio for over a year as the stake has represented around 20% of the total portfolio value. In fact, Mr. Vora likes to invest in companies that have an exposure to real estate, being either REITs or companies that own a significant real estate portfolio. Aside from Pinnacle, two other top picks in the fund’s equity portfolio were Life Time Fitness, Inc. (NYSE:LTM) and Macy’s, Inc. (NYSE:M), all three holdings amassing 47% of its $568.13 million portfolio.

In Life Time Fitness, Inc. (NYSE:LTM), Mr. Vora cut his stake by 35% during the fourth quarter to 1.41 million shares with an aggregate value of $79.55 million. Life Time Fitness is a developer and operator of large, multi-use sports and athletic, professional fitness, family recreation and spa centers in a resort-like environment. The stock appreciated by 21% between the end of August, when Vora initiated his stake in the company, and the end of 2014. The stake was initiated amid talks about Life Time Fitness, Inc. (NYSE:LTM)’s plans to spin-off its real estate into a REIT, which explains Mr. Vora’s decision to purchase shares. However, a couple of days ago, a report by Wall Street Journal stated that Life Time Fitness had been in talks with two private equity firms regarding a potential bid to acquire the company. Among other shareholders that would benefit from the acquisition of Life Time Fitness, Inc. (NYSE:LTM) is David Einhorn‘s Greenlight Capital, which initiated a stake during the fourth quarter, disclosing holding 1.84 million shares in its last 13F filing.

On the third spot is Macy’s, Inc. (NYSE:M), in which HG Vora disclosed a new position that contains 1.0 million shares, valued at $65.75 million. Even though Macy’s has not announced any plans regarding its vast real estate portfolio, it might do so in the near future, since a spin-off of real estate into a REIT has proven to be an effective way to increase shareholder value among many companies. Another retailer, Sears Holdings Corp (NASDAQ:SHLD), announced that it plans to spin-off its real estate portfolio as a measure to stop the stock’s consistent declines. Nevertheless, Macy’s, Inc. (NYSE:M)’s stock gained some 8% in the last 52 weeks and the company reported a 10% annual growth in EPS for 2014 to $4.40 and revenue growth to $27.93 billion from $27.69 billion in 2013. Among funds that we track, Robert Bishop’s Impala Asset Management was the largest shareholder of Macy’s, Inc. (NYSE:M), holding 1.68 million shares as of the end of last year.

Disclosure: None