Hedge funds and other institutional investors just filed their 13Fs with the Securities and Exchange Commission and announced their stock portfolios in late September. At Insider Monkey, we track nearly 900 active hedge funds and well-known investors. By analyzing their 13F filings, we can identify the stocks that they are overall bullish on. One of her favorites is Caesars Entertainment Inc. (NASDAQ:CZR), so let’s take a closer look at the mood in the current quarter.
Is Caesars Entertainment Inc. (NASDAQ:CZR) will take off soon? Prominent investors became less bullish. The number of long hedge fund positions has decreased by 3 in the last few months. Caesars Entertainment Inc. (NASDAQ:CZR) was in 71 hedge fund portfolios at the end of December. The all-time high for this statistic is 74. Our calculations have also shown that CZR is not one of them 30 Most Popular Stocks Among Hedge Funds (Click here for the Q4 ranking). At the end of the third quarter there were 74 hedge funds with CZR positions in our database.
The reputation of hedge funds as savvy investors has been tarnished over the past decade as their hedged returns have not kept up with the unhedged returns of market indices. Our research has shown that small-cap stocks of hedge funds managed to beat the market by double digits annually between 1999 and 2016, but the margin on outperformance has declined in recent years. Still, we were able to identify a select group of hedge fund holdings in advance that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (Details can be found here). We were also able to pre-identify a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly, the underperformance margin of these stocks has increased in recent years. Investors who have been in the market for a long time and sell these stocks would have achieved an annual return of more than 27% between 2015 and 2017. We have been tracking and sharing the list of these stocks in our quarterly newsletter since February 2017.
The story goes on
Robert Pohly of Samlyn Capital
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Do Hedge Funds Think CZR is a Good Stock to Buy Now?
At the end of December, a total of 71 of the hedge funds tracked by Insider Monkey were long in this stock, a change of -4% from the previous quarter. Below you can read about the change in hedge fund sentiment towards CZR over the past 22 quarters. As smart money capital changes hands, there is a select group of notable hedge fund managers who have significantly increased their holdings (or have already accumulated large positions).
Is CZR a Good Stock to Buy?
When looking at institutional investors, followed by Insider Monkey, Canyon Capital advisor, managed by Joshua Friedman and Mitchell Julis, holds the largest position in Caesars Entertainment Inc. (NASDAQ: CZR). Canyon Capital Advisors has a position of $ 225.1 million in the stock, which represents 9.7% of its 13F portfolio. In second place is Jericho Capital Asset Management, managed by Josh Resnick, with a position of $ 91.7 million. 2.2% of the 13F portfolio is allocated to the share. Some other hedge funds and institutional investors with similar optimism include Robert Pohly’s Samlyn Capital and Roberto Mignone Bridger Management and Glen Kachers Light Street Capital. In terms of the portfolio weights assigned to each position, Lafitte Capital Management assigned the largest weight to Caesars Entertainment Inc. (NASDAQ: CZR) at approximately 35.58% of its 13F portfolio. Toscafund Asset Management is also relatively bullish on the stock, providing 13.59 percent of its 13F stock portfolio to CZR.
Judging by the fact that Caesars Entertainment Inc. (NASDAQ: CZR) has faced a deterioration in sentiment across all of the hedge funds we tracked, we can see that some money managers dropped their entire stake in the last quarter. Interestingly, Dan Loebs third point sold the largest portion of Insider Monkey’s tracked “upper crust” funds valued at approximately $ 56.1 million. Robert Emil Zoellner’s fund, Alpine Associates, also sold its shares for around $ 43.5 million. These bearish behaviors are interesting given that overall interest in hedge funds was dropped by 3 funds in the last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Caesars Entertainment Inc. (NASDAQ: CZR), but similarly valued. These stocks are CarMax Inc (NYSE:KMX), Shinhan Financial Group Co., Ltd. (NYSE:SHG), Waters Corporation (NYSE:WHAT), Hewlett Packard Enterprise Company (NYSE:HPE), Citizens Financial Group Inc (NYSE:CFG), 10x Genomics, Inc. (NASDAQ:TXG) and Celanese Corporation (NYSE:THIS). The market valuations of this group of stocks come closest to the market valuation of CZR.
[table] Ticker, number of HRs with positions, total value of HR positions (x1000), change in HR position KMX, 46.1485714, -8 SHG, 7.27734.3 WAT, 30.1993478, -2 HPE, 30.923308 , -4 CFG, 38.453830.2 TXG, 33.745283.2 CE, 33.997491.7 average, 31.946691.0 [/table]
View table here When formatting problems occur.
As you can see, these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $ 947 million. That figure was $ 1,439 million in the case of CZR. CarMax Inc (NYSE:KMX) is the most popular stock in this table. On the other hand, Shinhan Financial Group Co., Ltd. (NYSE:SHG) is the least popular with only 7 bullish hedge fund positions. Compared to these stocks, Caesars Entertainment Inc. (NASDAQ: CZR) is more popular with hedge funds. Our overall hedge fund sentiment for CZR is 80.8. Stocks with a higher number of hedge fund positions relative to other stocks and relative to their historical range receive a higher sentiment score. Our calculations have shown that Top 30 most popular stocks Hedge funds returned 81.2% in 2019 and 2020, outperforming the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 7% through March 12, 2021 but managed to outperform the market by 1.6 percentage points. Hedge funds were also right to bet on CZR, as the stock has returned 35.5% since late December (through March 12) and outperformed the market even better. Hedge funds were clearly right to pile into this stock when compared to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider monkey.