Hedge Funds Are Betting On Caesars Entertainment Corp (CZR)

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Caesars Entertainment Corp (NASDAQ:CZR).

Is Caesars Entertainment Corp (NASDAQ:CZR) an attractive investment today? Investors who are in the know are taking a bullish view. The number of bullish hedge fund positions went up by 1 in recent months. CZR was in 23 hedge funds’ portfolios at the end of the third quarter of 2015. There were 22 hedge funds in our database with CZR positions at the end of the previous quarter. 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 InvenSense Inc (NYSE:INVN), Nuveen Performance Plus Municipal Fund (NYSE:NPP), and Berkshire Hills Bancorp, Inc. (NYSE:BHLB) to gather more data points.

According to most stock holders, hedge funds are seen as worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, Our experts choose to focus on the elite of this group, about 700 funds. Most estimates calculate that this group of people preside over most of the hedge fund industry’s total capital, and by observing their best equity investments, Insider Monkey has found various investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

With all of this in mind, let’s take a look at the latest action encompassing Caesars Entertainment Corp (NASDAQ:CZR).

How have hedgies been trading Caesars Entertainment Corp (NASDAQ:CZR)?

At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the second quarter. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John Paulson’s Paulson & Co has the largest position in Caesars Entertainment Corp (NASDAQ:CZR), worth close to $85.2 million, accounting for 0.4% of its total 13F portfolio. On Paulson & Co’s heels is Kenneth Mario Garschina of Mason Capital Management, with a $42.4 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism encompass Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors, George Soros’ Soros Fund Management and Matthew Knauer and Mina Faltas’s Nokota Management.

Now, specific money managers have been driving this bullishness. Silver Point Capital, managed by Edward A. Mule, initiated the most valuable position in Caesars Entertainment Corp (NASDAQ:CZR). Silver Point Capital had $5.7 million invested in the company at the end of the quarter. Robert Henry Lynch’s Aristeia Capital also initiated a $1.3 million position during the quarter. The other funds with brand new CZR positions are Christopher Pucillo’s Solus Alternative Asset Management, Neil Chriss’s Hutchin Hill Capital, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s now review hedge fund activity in other stocks similar to Caesars Entertainment Corp (NASDAQ:CZR). These stocks are InvenSense Inc (NYSE:INVN), Nuveen Performance Plus Municipal Fund (NYSE:NPP), Berkshire Hills Bancorp, Inc. (NYSE:BHLB), and TiVo Inc. (NASDAQ:TIVO). All of these stocks’ market caps match CZR’s market cap.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $254 million in CZR’s case. InvenSense Inc (NYSE:INVN) is the most popular stock in this table. On the other hand Nuveen Performance Plus Municipal Fund (NYSE:NPP) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Caesars Entertainment Corp (NASDAQ:CZR) 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.