In this piece, we will take a look at 5 of the best small-cap casino stocks hedge funds are buying. If you want to go over an introduction to the casino and gambling industry, then take a look at the 10 Best Small-Cap Casino Stocks Hedge Funds Are Buying.
5. Accel Entertainment, Inc. (NYSE:ACEL)
Market Capitalization as of October 4: $921.23 million
Number of Hedge Fund Holders: 17
Accel Entertainment, Inc. (NYSE:ACEL) operates as a distributed gaming operator, specializing in the installation, maintenance, and operation of gaming terminals and redemption devices that dispense winnings, including those with automated teller machine (ATM) features. Furthermore, Accel Entertainment, Inc. (NYSE:ACEL) oversees various other amusement devices within authorized non-casino establishments.
Accel Entertainment, Inc. (NYSE:ACEL) reported earnings of $0.24 per share, surpassing estimates by 50.00% compared to the projected $0.16 per share. This also represents an increase in earnings from the same period last year when the company reported $0.24 per share. Additionally, Accel Entertainment, Inc. (NYSE:ACEL) posted optimistic revenues of $292.6 million, reflecting a 28.43% growth from the previous year and exceeding consensus estimates by 5.44%, which were set at $277.5 million.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Darlington Partners Capital is a leading shareholder in Accel Entertainment, Inc. (NYSE:ACEL), with 8.09 million shares worth more than $85.5 million.
4. Monarch Casino & Resort, Inc. (NASDAQ:MCRI)
Market Capitalization as of October 4: $1.2 billion
Number of Hedge Fund Holders: 19
Monarch Casino & Resort, Inc. (NASDAQ:MCRI) is an American firm within the gaming and hospitality sector, with a primary emphasis on casino operations and the development of resorts. The company manages casino properties providing diverse gaming choices for its patrons.
During the second quarter of 2023, Monarch Casino & Resort, Inc. (NASDAQ: MCRI) disclosed a revenue of $123.6 million, marking a growth of 7.3% compared to the same period in the previous year. The company had a substantial sum of over $35 million available in cash and cash equivalents. Specifically, its casino revenue surged to $68.8 million from $63.8 million in the corresponding period last year. On August 30, Monarch Casino & Resort, Inc. (NASDAQ: MCRI) declared a quarterly dividend of $0.30 per share, contributing to a dividend yield of 1.92% as of October 4.
As of the latest data, the count of hedge funds tracked by Insider Monkey that hold stakes in Monarch Casino & Resort, Inc. (NASDAQ: MCRI) remained at 19, consistent with the previous quarter. The combined value of these stakes surpasses $53.6 million. Among the hedge funds being tracked by Insider Monkey, Texas-based investment firm Lafitte Capital Management is a leading shareholder in Monarch Casino & Resort, Inc. (NASDAQ:MCRI), with 370,917 shares worth more than $21.8 million.
3. PlayAGS, Inc. (NYSE:AGS)
Market Capitalization as of October 4: $251.41 million
Number of Hedge Fund Holders: 22
PlayAGS, Inc. (NYSE:AGS) is a company that creates and provides gaming services and products to the gaming industry, including casinos, both in the United States and globally. The company’s operations are categorized into three segments: Electronic Gaming Machines (EGM), Table Products, and Interactive Games (Interactive). PlayAGS (NYSE:AGS) has seen a strong 35.17% increase in its shares year to date, showcasing a robust performance compared to other small-cap gaming stocks. Several analysts are optimistic about the potential for further upside for this slot machine manufacturer.
22 of the 910 hedge funds part of Insider Monkey’s Q2 2023 database had invested in the company. PlayAGS, Inc. (NYSE:AGS)’s largest hedge fund shareholder is Don Morgan’s Brigade Capital with a $10.65 million investment.
2. Playa Hotels & Resorts NV (NASDAQ:PLYA)
Market Capitalization as of October 4: $1.05 billion
Number of Hedge Fund Holders: 24
Playa Hotels & Resorts N.V. (NASDAQ:PLYA) also known as “Playa” stands as a prominent proprietor, operator, and developer of all-inclusive resorts situated in highly sought-after beachfront locales across Mexico, Jamaica, and the Dominican Republic. Currently, Playa oversees a comprehensive portfolio, encompassing 24 resorts with a total of 9,097 rooms. These resorts operate under brands such as Hyatt Zilara, Hyatt Ziva, Hilton All-Inclusive, Tapestry Collection by Hilton, Wyndham Alltra, Seadust, Jewel Resorts, and The Luxury Collection.
According to Insider Monkey’s second quarter 2023 hedge fund survey, out of the 910 hedge funds analyzed, 24 of them had chosen to invest in Playa Hotels & Resorts NV (NASDAQ:PLYA). Notably, among these investors, Davidson Kempner, led by Thomas Lenox Kempner, emerged as the largest shareholder, holding a significant stake valued at $123.26 million.
In its investor letter for the second quarter of 2023, Silver Beech Capital provided a comment or statement concerning Playa Hotels & Resorts N.V. (NASDAQ:PLYA):
“Playa Hotels & Resorts N.V. (NASDAQ:PLYA) is a small-capitalization owner/operator of 25 all-inclusive resorts in Mexico (Cancun and Pacific Coast), the Dominican Republic, and Jamaica. Playa’s portfolio is branded (mostly Hilton and Hyatt), includes primarily luxury/upscale resorts, and operates at among the highest margins in the hotel industry. Playa’s resorts are irreplaceable assets in supply-constrained markets that continue to benefit from rising post-COVID international tourism.
We believe the public market discounts Playa’s shares based on recessionary fears, however, strong international flight data into Playa’s regional airport hubs do not support this view, and spot private market valuations for Playa’s hotels exceed its public market valuation. Management has demonstrated impressive capital allocation to address this valuation gap by moderating growth capital expenses for only the highest return projects and looking to sell select strategic resorts and repurchase shares at today’s attractive level. Over the last two quarters, Playa has repurchased more than 4% of the company’s outstanding shares. The company trades at a TEV/EBITDA of 7.6x (2023E), and a low double-digit free cash flow yield. We believe Playa’s intrinsic value is more than 50% greater than its June 30 share price.”
1. Everi Holdings Inc. (NYSE:EVRI)
Market Capitalization as of October 4: $1.12 billion
Number of Hedge Fund Holders: 33
Everi Holdings Inc. (NYSE:EVRI), previously known as Global Cash Access Holdings, Inc., is a Nevada-based company located in Spring Valley. The company manufactures slot machines and offers financial equipment and services to casinos. Everi Holdings Inc. operates through two primary segments: Games and Financial Technology Solutions (FinTech).
Everi Holdings Inc. (NYSE:EVRI) released its second-quarter results on August 9. Revenues showed a 6% increase, reaching $208.7 million, compared to $197.2 million in the previous year. Within the FinTech segment, revenues experienced a 13% growth, totaling $95.6 million, driven by a 26% increase in software and other revenues, a 9% rise in financial access revenues, and a 6% increase in hardware revenues. In the Games segment, revenues saw a 1% rise, reaching $113.1 million, with a 5% increase in gaming operations.
At the close of the second quarter of 2023, 33 hedge funds disclosed positions in Everi Holdings Inc. (NYSE:EVRI) worth $190.48 million. Among the hedge funds being tracked by Insider Monkey, Jeffrey Jacobowitz’s Simcoe Capital Management is the most prominent shareholder in the company, owning over 3.98 million shares.
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