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Were Hedge Funds Right About Selling Twin River Worldwide Holdings Inc. (TRWH)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Twin River Worldwide Holdings Inc. (NYSE:TRWH) based on that data and determine whether they were really smart about the stock.

Is Twin River Worldwide Holdings Inc. (NYSE:TRWH) a healthy stock for your portfolio? Prominent investors were getting less bullish. The number of bullish hedge fund positions were cut by 2 recently. Our calculations also showed that TRWH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most shareholders, hedge funds are perceived as slow, old investment tools of the past. While there are over 8000 funds trading at the moment, Our researchers hone in on the top tier of this group, about 850 funds. It is estimated that this group of investors have their hands on the majority of the smart money’s total capital, and by paying attention to their top picks, Insider Monkey has revealed numerous investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Paul Reeder PAR Capital Management

Paul Reeder of PAR Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 biggest gold mining companies to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to view the latest hedge fund action surrounding Twin River Worldwide Holdings Inc. (NYSE:TRWH).

How are hedge funds trading Twin River Worldwide Holdings Inc. (NYSE:TRWH)?

At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TRWH over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

The largest stake in Twin River Worldwide Holdings Inc. (NYSE:TRWH) was held by HG Vora Capital Management, which reported holding $39 million worth of stock at the end of September. It was followed by PAR Capital Management with a $35.6 million position. Other investors bullish on the company included Solus Alternative Asset Management, Newtyn Management, and Winton Capital Management. In terms of the portfolio weights assigned to each position Solus Alternative Asset Management allocated the biggest weight to Twin River Worldwide Holdings Inc. (NYSE:TRWH), around 11.33% of its 13F portfolio. HG Vora Capital Management is also relatively very bullish on the stock, designating 3.81 percent of its 13F equity portfolio to TRWH.

Seeing as Twin River Worldwide Holdings Inc. (NYSE:TRWH) has witnessed falling interest from the aggregate hedge fund industry, we can see that there is a sect of money managers that slashed their positions entirely in the first quarter. Intriguingly, Leon Cooperman’s Omega Advisors dumped the largest investment of the “upper crust” of funds tracked by Insider Monkey, comprising close to $5.1 million in stock, and Eli Samaha’s Madison Avenue Partners was right behind this move, as the fund said goodbye to about $3.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds in the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Twin River Worldwide Holdings Inc. (NYSE:TRWH) but similarly valued. We will take a look at The First of Long Island Corporation (NASDAQ:FLIC), Anika Therapeutics, Inc. (NASDAQ:ANIK), GoPro Inc (NASDAQ:GPRO), and Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX). This group of stocks’ market valuations resemble TRWH’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FLIC 12 31326 3
ANIK 19 48692 0
GPRO 9 199300 -1
BLX 3 30130 0
Average 10.75 77362 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $83 million in TRWH’s case. Anika Therapeutics, Inc. (NASDAQ:ANIK) is the most popular stock in this table. On the other hand Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX) is the least popular one with only 3 bullish hedge fund positions. Twin River Worldwide Holdings Inc. (NYSE:TRWH) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on TRWH as the stock returned 65.3% in Q2 (through June 25th) 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.