How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding VICI Properties Inc. (NYSE:VICI) and determine whether hedge funds had an edge regarding this stock.
Is VICI Properties Inc. (NYSE:VICI) undervalued? Investors who are in the know were getting more optimistic. The number of long hedge fund bets improved by 10 recently. VICI Properties Inc. (NYSE:VICI) was in 47 hedge funds’ portfolios at the end of September. The all time high for this statistic is 59. Our calculations also showed that VICI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s review the new hedge fund action surrounding VICI Properties Inc. (NYSE:VICI).
Stuart Zimmer of Zimmer Partners
Do Hedge Funds Think VICI Is A Good Stock To Buy Now?
At the end of September, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the previous quarter. The graph below displays the number of hedge funds with bullish position in VICI over the last 25 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Gates Capital Management, managed by Jeffrey Gates, holds the biggest position in VICI Properties Inc. (NYSE:VICI). Gates Capital Management has a $198.8 million position in the stock, comprising 5.5% of its 13F portfolio. The second most bullish fund manager is John Khoury of Long Pond Capital, with a $181.3 million position; the fund has 6.6% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain Stuart J. Zimmer’s Zimmer Partners, Ken Griffin’s Citadel Investment Group and Matthew Halbower’s Pentwater Capital Management. In terms of the portfolio weights assigned to each position Hein Park Capital allocated the biggest weight to VICI Properties Inc. (NYSE:VICI), around 9.92% of its 13F portfolio. Long Pond Capital is also relatively very bullish on the stock, designating 6.63 percent of its 13F equity portfolio to VICI.
Now, key money managers have been driving this bullishness. Long Pond Capital, managed by John Khoury, established the most outsized position in VICI Properties Inc. (NYSE:VICI). Long Pond Capital had $181.3 million invested in the company at the end of the quarter. Stuart J. Zimmer’s Zimmer Partners also made a $172.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Himanshu Gulati’s Antara Capital, Brian J. Higgins’s King Street Capital, and Joseph Samuels’s Islet Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as VICI Properties Inc. (NYSE:VICI) but similarly valued. We will take a look at HEICO Corporation (NYSE:HEI), Amcor plc (NYSE:AMCR), Quest Diagnostics Incorporated (NYSE:DGX), SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), Teleflex Incorporated (NYSE:TFX), Domino’s Pizza, Inc. (NYSE:DPZ), and J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT). All of these stocks’ market caps are closest to VICI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HEI | 35 | 719437 | -6 |
| AMCR | 19 | 214115 | 3 |
| DGX | 36 | 488311 | 5 |
| SSNC | 51 | 2925436 | 2 |
| TFX | 26 | 579122 | -4 |
| DPZ | 36 | 2541766 | 5 |
| JBHT | 22 | 315309 | -4 |
| Average | 32.1 | 1111928 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $1112 million. That figure was $1378 million in VICI’s case. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is the most popular stock in this table. On the other hand Amcor plc (NYSE:AMCR) is the least popular one with only 19 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 77.6. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on VICI as the stock returned 2% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
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Disclosure: None. This article was originally published at Insider Monkey.
