At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards SciPlay Corporation (NASDAQ:SCPL) at the end of the second quarter and determine whether the smart money was really smart about this stock.
Is SciPlay Corporation (NASDAQ:SCPL) a bargain? The smart money was becoming hopeful. The number of bullish hedge fund bets increased by 9 lately. SciPlay Corporation (NASDAQ:SCPL) was in 26 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SCPL isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
In the eyes of most stock holders, hedge funds are seen as slow, outdated investment vehicles of the past. While there are more than 8000 funds in operation at present, Our researchers look at the leaders of this club, approximately 850 funds. These investment experts control bulk of all hedge funds’ total asset base, and by tailing their top stock picks, Insider Monkey has unearthed numerous investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Paul Hondros of AlphaOne Capital
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What does smart money think about SciPlay Corporation (NASDAQ:SCPL)?
At the end of the second quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 53% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SCPL over the last 20 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
More specifically, Park West Asset Management was the largest shareholder of SciPlay Corporation (NASDAQ:SCPL), with a stake worth $28.8 million reported as of the end of September. Trailing Park West Asset Management was Nantahala Capital Management, which amassed a stake valued at $20.2 million. Maple Rock Capital, Renaissance Technologies, and AREX Capital 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 AREX Capital Management allocated the biggest weight to SciPlay Corporation (NASDAQ:SCPL), around 7.31% of its 13F portfolio. Maple Rock Capital is also relatively very bullish on the stock, dishing out 3.12 percent of its 13F equity portfolio to SCPL.
As one would reasonably expect, key money managers have been driving this bullishness. Intrinsic Edge Capital, managed by Mark Coe, created the largest position in SciPlay Corporation (NASDAQ:SCPL). Intrinsic Edge Capital had $6.3 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $3.4 million position during the quarter. The other funds with new positions in the stock are Josh Donfeld and David Rogers’s Castle Hook Partners, Warren Lammert’s Granite Point Capital, and Paul Hondros’s AlphaOne Capital Partners.
Let’s go over hedge fund activity in other stocks similar to SciPlay Corporation (NASDAQ:SCPL). These stocks are BankUnited Inc (NYSE:BKU), Nelnet, Inc. (NYSE:NNI), Simmons First National Corporation (NASDAQ:SFNC), Cantel Medical Corp. (NYSE:CMD), Revolution Medicines, Inc. (NASDAQ:RVMD), IAMGOLD Corporation (NYSE:IAG), and Brandywine Realty Trust (NYSE:BDN). 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 |
|---|---|---|---|
| BKU | 16 | 187994 | -2 |
| NNI | 12 | 84098 | -1 |
| SFNC | 13 | 30834 | 9 |
| CMD | 19 | 134676 | 2 |
| RVMD | 13 | 269652 | -7 |
| IAG | 18 | 176709 | 1 |
| BDN | 12 | 26488 | 1 |
| Average | 14.7 | 130064 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.7 hedge funds with bullish positions and the average amount invested in these stocks was $130 million. That figure was $136 million in SCPL’s case. Cantel Medical Corp. (NYSE:CMD) is the most popular stock in this table. On the other hand Nelnet, Inc. (NYSE:NNI) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks SciPlay Corporation (NASDAQ:SCPL) is more popular among hedge funds. Our overall hedge fund sentiment score for SCPL 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 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 21.3% in 2020 through September 25th and still managed to beat the market by 17.7 percentage points. Hedge funds were also right about betting on SCPL, though not to the same extent, as the stock returned 7.2% since the end of June and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
