Do Hedge Funds Love Monarch Casino & Resort, Inc. (MCRI)?

At Insider Monkey we follow around 730 of the best-performing investors and even though many of them lost money in the last several months, the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.

Hedge fund interest in Monarch Casino & Resort, Inc. (NASDAQ:MCRI) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare MCRI to other stocks including Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), Oxford Immunotec Global PLC (NASDAQ:OXFD), and Triumph Bancorp Inc (NASDAQ:TBK) to get a better sense of its popularity.

Keeping this in mind, we’re going to analyze the key action surrounding Monarch Casino & Resort, Inc. (NASDAQ:MCRI).

How are hedge funds trading Monarch Casino & Resort, Inc. (NASDAQ:MCRI)?

Heading into Q4, a total of an 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Covalent Capital Partners, managed by Robert Hockett, holds the number one position in Monarch Casino & Resort, Inc. (NASDAQ:MCRI). Covalent Capital Partners has a $12.3 million position in the stock, comprising 2.6% of its 13F portfolio. The second most bullish fund manager is Lafitte Capital Management, managed by Bryant Regan, which holds a $7.6 million position; the fund has 5.6% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions include Jim Simons’ Renaissance Technologies, Dmitry Balyasny’s Balyasny Asset Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks similar to Monarch Casino & Resort, Inc. (NASDAQ:MCRI). We will take a look at Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), Oxford Immunotec Global PLC (NASDAQ:OXFD), Triumph Bancorp Inc (NASDAQ:TBK), and Bassett Furniture Industries Inc. (NASDAQ:BSET). This group of stocks’ market values are similar to MCRI’s market value.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $25 million in MCRI’s case. Bassett Furniture Industries Inc. (NASDAQ:BSET) is the most popular stock in this table. On the other hand Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Monarch Casino & Resort, Inc. (NASDAQ:MCRI) is as less popular as GLDD. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.