Hedge Funds Are Dumping Boyd Gaming Corporation (BYD)

Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Boyd Gaming Corporation (NYSE:BYD).

Is Boyd Gaming Corporation going to take off soon? Money managers are getting less optimistic. The number of bullish hedge fund bets decreased by 2 recently. 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 National General Holdings Corp (NASDAQ:NGHC), New Relic Inc (NYSE:NEWR), and Dorman Products Inc. (NASDAQ:DORM) to gather more data points.

Today there are a multitude of signals stock market investors have at their disposal to appraise stocks. Some of the most under-the-radar signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the elite money managers can outperform the market by a significant amount (see the details here).

Now, let’s view the fresh action regarding Boyd Gaming Corporation (NYSE:BYD).

Hedge fund activity in Boyd Gaming Corporation (NYSE:BYD)

At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the second quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, PAR Capital Management, managed by Paul Reeder and Edward Shapiro, holds the number one position in Boyd Gaming Corporation (NYSE:BYD). PAR Capital Management has a $125.3 million position in the stock, comprising 2.6% of its 13F portfolio. The second largest stake is held by Rehan Jaffer’s H Partners Management, with a $68.7 million position; 5.1% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Jacob Doft’s Highline Capital Management, Mario Gabelli’s GAMCO Investors, and Joel Greenblatt’s Gotham Asset Management.

Due to the fact that Boyd Gaming Corporation (NYSE:BYD) has faced a bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of hedge funds who sold off their full holdings in the third quarter. At the top of the heap, Kieran Goodwin’s Panning Capital Management cut the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $33.6 million in stock. Joshua Friedman and Mitchell Julis’ fund, Canyon Capital Advisors, also dumped its stock, about $12.2 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 2 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Boyd Gaming Corporation (NYSE:BYD) but similarly valued. We will take a look at National General Holdings Corp (NASDAQ:NGHC), New Relic Inc (NYSE:NEWR), Dorman Products Inc. (NASDAQ:DORM), and American Equity Investment Life Holding (NYSE:AEL). This group of stocks’ market values match BYD’s market value.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $212 million. That figure was $470 million in BYD’s case. American Equity Investment Life Holding (NYSE:AEL) is the most popular stock in this table. On the other hand Dorman Products Inc. (NASDAQ:DORM) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Boyd Gaming Corporation (NYSE:BYD) 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.