With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was SciPlay Corporation (NASDAQ:SCPL).
SciPlay Corporation (NASDAQ:SCPL) was in 16 hedge funds’ portfolios at the end of the second quarter of 2019. SCPL has seen an increase in hedge fund interest lately. There were 0 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 (see the video below).
Video: Click the image to 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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s view the new hedge fund action surrounding SciPlay Corporation (NASDAQ:SCPL).
How have hedgies been trading SciPlay Corporation (NASDAQ:SCPL)?
At the end of the second quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16 from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in SCPL a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in SciPlay Corporation (NASDAQ:SCPL) was held by Park West Asset Management, which reported holding $45.7 million worth of stock at the end of March. It was followed by SG Capital Management with a $10.6 million position. Other investors bullish on the company included Samlyn Capital, Citadel Investment Group, and Alyeska Investment Group.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Park West Asset Management, managed by Peter S. Park, established the most outsized position in SciPlay Corporation (NASDAQ:SCPL). Park West Asset Management had $45.7 million invested in the company at the end of the quarter. Ken Grossman and Glen Schneider’s SG Capital Management also made a $10.6 million investment in the stock during the quarter. The following funds were also among the new SCPL investors: Robert Pohly’s Samlyn Capital, Ken Griffin’s Citadel Investment Group, and Anand Parekh’s Alyeska Investment Group.
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 QEP Resources Inc (NYSE:QEP), Usa Compression Partners LP (NYSE:USAC), Forward Air Corporation (NASDAQ:FWRD), and Dine Brands Global, Inc. (NYSE:DIN). This group of stocks’ market caps are similar to SCPL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QEP | 18 | 256247 | -5 |
| USAC | 3 | 1019 | -2 |
| FWRD | 18 | 102012 | 3 |
| DIN | 15 | 159846 | -5 |
| Average | 13.5 | 129781 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $130 million. That figure was $96 million in SCPL’s case. QEP Resources Inc (NYSE:QEP) is the most popular stock in this table. On the other hand Usa Compression Partners LP (NYSE:USAC) 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately SCPL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SCPL were disappointed as the stock returned -22% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.