In this article you are going to find out whether hedge funds think SciPlay Corporation (NASDAQ:SCPL) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
SciPlay Corporation (NASDAQ:SCPL) was in 17 hedge funds’ portfolios at the end of the first quarter of 2020. SCPL investors should be aware of an increase in support from the world’s most elite money managers recently. There were 15 hedge funds in our database with SCPL positions at the end of the previous quarter. Our calculations also showed that SCPL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the recent hedge fund action surrounding SciPlay Corporation (NASDAQ:SCPL).
How have hedgies been trading SciPlay Corporation (NASDAQ:SCPL)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in SCPL over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Park West Asset Management held the most valuable stake in SciPlay Corporation (NASDAQ:SCPL), which was worth $31.7 million at the end of the third quarter. On the second spot was Nantahala Capital Management which amassed $9.5 million worth of shares. AREX Capital Management, SG Capital Management, and Maple Rock 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 AREX Capital Management allocated the biggest weight to SciPlay Corporation (NASDAQ:SCPL), around 10.04% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, dishing out 3.13 percent of its 13F equity portfolio to SCPL.
As one would reasonably expect, key money managers have jumped into SciPlay Corporation (NASDAQ:SCPL) headfirst. Maple Rock Capital, managed by Len Kipp and Xavier Majic, assembled the biggest position in SciPlay Corporation (NASDAQ:SCPL). Maple Rock Capital had $6.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.7 million position during the quarter. The other funds with brand new SCPL positions are Renaissance Technologies, Marc Majzner’s Clearline Capital, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as SciPlay Corporation (NASDAQ:SCPL) but similarly valued. These stocks are 360 Finance, Inc. (NASDAQ:QFIN), WillScot Corporation (NASDAQ:WSC), Installed Building Products Inc (NYSE:IBP), and Essential Properties Realty Trust, Inc. (NYSE:EPRT). This group of stocks’ market values are closest to SCPL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QFIN | 3 | 10465 | -9 |
| WSC | 28 | 187831 | 0 |
| IBP | 21 | 86225 | -3 |
| EPRT | 8 | 11280 | -1 |
| Average | 15 | 73950 | -3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $80 million in SCPL’s case. WillScot Corporation (NASDAQ:WSC) is the most popular stock in this table. On the other hand 360 Finance, Inc. (NASDAQ:QFIN) is the least popular one with only 3 bullish hedge fund positions. SciPlay Corporation (NASDAQ:SCPL) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on SCPL as the stock returned 49.6% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
