Are Hedge Funds Right About MGM Resorts International (MGM)?

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards MGM Resorts International (NYSE:MGM)

MGM Resorts International (NYSE:MGM) was in 53 hedge funds’ portfolios at the end of September. MGM investors should pay attention to a decrease in activity from the world’s largest hedge funds of late. There were 59 hedge funds in our database with MGM holdings at the end of the previous quarter. At the end of this article we will also compare MGM to other stocks including Marathon Oil Corporation (NYSE:MRO), National-Oilwell Varco, Inc. (NYSE:NOV), and Macerich Co (NYSE:MAC) to get a better sense of its popularity.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

LiliGraphie/Shutterstock.com

What have hedge funds been doing with MGM Resorts International (NYSE:MGM)?

At Q3’s end, a total of 53 of the hedge funds tracked by Insider Monkey were long this stock, a 10% dip from the previous quarter, after hedge fund ownership nearly reached 60 funds. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Joshua Friedman and Mitchell Julis’ Canyon Capital Advisors has the biggest position in MGM Resorts International (NYSE:MGM), worth close to $458.7 million, amounting to 16.7% of its total 13F portfolio. The second largest stake is held by OZ Management, led by Daniel S. Och, holding a $217.9 million position; 1.3% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions comprise Paul Reeder and Edward Shapiro’s PAR Capital Management, Jonathon Jacobson’s Highfields Capital Management, and Roberto Mignone’s Bridger Management.