At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Caesars Entertainment, Inc. (NASDAQ:CZR) makes for a good investment right now.
Caesars Entertainment, Inc. (NASDAQ:CZR) has seen an increase in support from the world’s most elite money managers in recent months. Caesars Entertainment, Inc. (NASDAQ:CZR) was in 74 hedge funds’ portfolios at the end of September. The all time high for this statistics is 71. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 50 hedge funds in our database with CZR holdings at the end of June. Our calculations also showed that CZR isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to take a look at the new hedge fund action surrounding Caesars Entertainment, Inc. (NASDAQ:CZR).
Hedge fund activity in Caesars Entertainment, Inc. (NASDAQ:CZR)
Heading into the fourth quarter of 2020, a total of 74 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 48% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CZR over the last 21 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
More specifically, Canyon Capital Advisors was the largest shareholder of Caesars Entertainment, Inc. (NASDAQ:CZR), with a stake worth $293.2 million reported as of the end of September. Trailing Canyon Capital Advisors was Light Street Capital, which amassed a stake valued at $85.1 million. Citadel Investment Group, Jericho Capital Asset Management, and Bridger Management 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 Lafitte Capital Management allocated the biggest weight to Caesars Entertainment, Inc. (NASDAQ:CZR), around 34.97% of its 13F portfolio. Toscafund Asset Management is also relatively very bullish on the stock, designating 31.17 percent of its 13F equity portfolio to CZR.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Light Street Capital, managed by Glen Kacher, created the biggest position in Caesars Entertainment, Inc. (NASDAQ:CZR). Light Street Capital had $85.1 million invested in the company at the end of the quarter. Josh Resnick’s Jericho Capital Asset Management also made a $77.3 million investment in the stock during the quarter. The other funds with brand new CZR positions are Dan Loeb’s Third Point, Doug Silverman and Alexander Klabin’s Senator Investment Group, and Robert Pohly’s Samlyn Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Caesars Entertainment, Inc. (NASDAQ:CZR) but similarly valued. We will take a look at The Toro Company (NYSE:TTC), American Homes 4 Rent (NYSE:AMH), Neurocrine Biosciences, Inc. (NASDAQ:NBIX), Watsco Inc (NYSE:WSO), ON Semiconductor Corporation (NASDAQ:ON), L Brands Inc (NYSE:LB), and The Western Union Company (NYSE:WU). This group of stocks’ market caps match CZR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TTC | 32 | 959661 | 1 |
| AMH | 24 | 294356 | 1 |
| NBIX | 38 | 1005157 | 0 |
| WSO | 29 | 269460 | 8 |
| ON | 29 | 360766 | -3 |
| LB | 45 | 3367576 | 3 |
| WU | 36 | 669370 | 2 |
| Average | 33.3 | 989478 | 1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.3 hedge funds with bullish positions and the average amount invested in these stocks was $989 million. That figure was $1857 million in CZR’s case. L Brands Inc (NYSE:LB) is the most popular stock in this table. On the other hand American Homes 4 Rent (NYSE:AMH) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Caesars Entertainment, Inc. (NASDAQ:CZR) is more popular among hedge funds. Our overall hedge fund sentiment score for CZR is 90. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 30.7% in 2020 through November 27th but still managed to beat the market by 16.1 percentage points. Hedge funds were also right about betting on CZR as the stock returned 25% since the end of September (through 11/27) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
