As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Penn National Gaming, Inc (NASDAQ:PENN) in this article.
Penn National Gaming, Inc (NASDAQ:PENN) investors should be aware of an increase in activity from the world’s largest hedge funds lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Hawaiian Holdings, Inc. (NASDAQ:HA), DigitalGlobe Inc (NYSE:DGI), and IPC The Hospitalist Company Inc (NASDAQ:IPCM) to gather more data points.
In the eyes of most shareholders, hedge funds are viewed as unimportant, old investment vehicles of yesteryear. While there are more than 8000 funds trading at present, Our experts hone in on the leaders of this club, around 700 funds. These money managers have their hands on the majority of the hedge fund industry’s total asset base, and by paying attention to their finest stock picks, Insider Monkey has come up with a few investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, we’re going to review the key action encompassing Penn National Gaming, Inc (NASDAQ:PENN).
How are hedge funds trading Penn National Gaming, Inc (NASDAQ:PENN)?
Heading into Q4, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the second quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Balyasny Asset Management, managed by Dmitry Balyasny, holds the largest position in Penn National Gaming, Inc (NASDAQ:PENN). Balyasny Asset Management has an $118 million position in the stock, comprising 0.9% of its 13F portfolio. The second largest stake is held by Paul Reeder and Edward Shapiro of PAR Capital Management, with an $99.7 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism comprise Jacob Doft’s Highline Capital Management, Israel Englander’s Millennium Management and Robert Hockett’s Covalent Capital Partners.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. McKinley Capital Management, managed by Robert B. Gillam, assembled the largest position in Penn National Gaming, Inc (NASDAQ:PENN). McKinley Capital Management had $4.7 million invested in the company at the end of the quarter. Andre F. Perold’s HighVista Strategies also made an $3.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, Matthew Tewksbury’s Stevens Capital Management, and Ken Gray and Steve Walsh’s Bryn Mawr Capital.
Let’s also examine hedge fund activity in other stocks similar to Penn National Gaming, Inc (NASDAQ:PENN). These stocks are Hawaiian Holdings, Inc. (NASDAQ:HA), DigitalGlobe Inc (NYSE:DGI),IPC Healthcare Inc (NASDAQ:IPCM), and Moelis & Co (NYSE:MC). This group of stocks’ market valuations match PENN’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $154 million. That figure was $472 million in PENN’s case. Hawaiian Holdings, Inc. (NASDAQ:HA) is the most popular stock in this table. On the other hand Moelis & Co (NYSE:MC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Penn National Gaming, Inc (NASDAQ:PENN) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.