Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Wynn Resorts, Limited (NASDAQ:WYNN) to find out whether there were any major changes in hedge funds’ views.
Wynn Resorts, Limited (NASDAQ:WYNN) has seen a decrease in enthusiasm from smart money lately. Wynn Resorts, Limited (NASDAQ:WYNN) was in 32 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 52. Our calculations also showed that WYNN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Matthew Halbower of Pentwater Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to take a peek at the key hedge fund action regarding Wynn Resorts, Limited (NASDAQ:WYNN).
Do Hedge Funds Think WYNN Is A Good Stock To Buy Now?
At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the second quarter of 2021. By comparison, 43 hedge funds held shares or bullish call options in WYNN a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of Wynn Resorts, Limited (NASDAQ:WYNN), with a stake worth $301.8 million reported as of the end of September. Trailing Citadel Investment Group was Citadel Investment Group, which amassed a stake valued at $112.2 million. Millennium Management, D E Shaw, and Shellback Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Prentice Capital Management allocated the biggest weight to Wynn Resorts, Limited (NASDAQ:WYNN), around 3.21% of its 13F portfolio. Bronson Point Partners is also relatively very bullish on the stock, designating 2.96 percent of its 13F equity portfolio to WYNN.
Since Wynn Resorts, Limited (NASDAQ:WYNN) has faced a decline in interest from the aggregate hedge fund industry, we can see that there exists a select few funds that slashed their entire stakes heading into Q4. Intriguingly, Gil Simon’s SoMa Equity Partners dropped the biggest investment of the 750 funds monitored by Insider Monkey, totaling about $214 million in stock, and David Cohen and Harold Levy’s Iridian Asset Management was right behind this move, as the fund dumped about $115.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 5 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to Wynn Resorts, Limited (NASDAQ:WYNN). We will take a look at CubeSmart (NYSE:CUBE), Penumbra Inc (NYSE:PEN), A. O. Smith Corporation (NYSE:AOS), Manhattan Associates, Inc. (NASDAQ:MANH), McAfee Corp. (NASDAQ:MCFE), CyrusOne Inc (NASDAQ:CONE), and Lithia Motors Inc (NYSE:LAD). All of these stocks’ market caps are closest to WYNN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CUBE | 22 | 225467 | 4 |
| PEN | 33 | 553799 | 3 |
| AOS | 29 | 564878 | 3 |
| MANH | 25 | 475224 | -3 |
| MCFE | 31 | 330697 | 13 |
| CONE | 27 | 495607 | 1 |
| LAD | 64 | 2823225 | 1 |
| Average | 33 | 781271 | 3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $781 million. That figure was $283 million in WYNN’s case. Lithia Motors Inc (NYSE:LAD) is the most popular stock in this table. On the other hand CubeSmart (NYSE:CUBE) is the least popular one with only 22 bullish hedge fund positions. Wynn Resorts, Limited (NASDAQ:WYNN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WYNN is 30.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately WYNN wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WYNN investors were disappointed as the stock returned -4.4% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Wynn Resorts Ltd (NASDAQ:WYNN)
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Disclosure: None. This article was originally published at Insider Monkey.
