We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether VICI Properties Inc. (NYSE:VICI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
VICI Properties Inc. (NYSE:VICI) shareholders have witnessed a decrease in hedge fund interest recently. Our calculations also showed that VICI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the 21st century investor’s toolkit there are several methods stock traders use to assess publicly traded companies. A pair of the most useful methods are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best money managers can outpace the market by a healthy amount (see the details here).
Joshua Friedman of Canyon Capital Advisors
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when 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 analyze the fresh hedge fund action encompassing VICI Properties Inc. (NYSE:VICI).
How have hedgies been trading VICI Properties Inc. (NYSE:VICI)?
At Q4’s end, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. On the other hand, there were a total of 38 hedge funds with a bullish position in VICI a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Canyon Capital Advisors was the largest shareholder of VICI Properties Inc. (NYSE:VICI), with a stake worth $439.6 million reported as of the end of September. Trailing Canyon Capital Advisors was Citadel Investment Group, which amassed a stake valued at $201.3 million. Senator Investment Group, Soros Fund Management, and OZ 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 Canyon Capital Advisors allocated the biggest weight to VICI Properties Inc. (NYSE:VICI), around 10.25% of its 13F portfolio. Dendur Capital is also relatively very bullish on the stock, setting aside 8.35 percent of its 13F equity portfolio to VICI.
Due to the fact that VICI Properties Inc. (NYSE:VICI) has experienced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedgies that slashed their positions entirely in the third quarter. At the top of the heap, Clint Carlson’s Carlson Capital sold off the biggest stake of the “upper crust” of funds followed by Insider Monkey, worth about $38.4 million in stock. Matthew Halbower’s fund, Pentwater Capital Management, also dropped its stock, about $29.4 million worth. These moves are important to note, as aggregate hedge fund interest fell by 3 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as VICI Properties Inc. (NYSE:VICI) but similarly valued. We will take a look at LINE Corporation (NYSE:LN), The Trade Desk, Inc. (NASDAQ:TTD), Lincoln National Corporation (NYSE:LNC), and Godaddy Inc (NYSE:GDDY). This group of stocks’ market caps match VICI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LN | 13 | 96390 | 5 |
| TTD | 24 | 368569 | -2 |
| LNC | 40 | 1212971 | 3 |
| GDDY | 51 | 2626449 | 0 |
| Average | 32 | 1076095 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $1076 million. That figure was $1827 million in VICI’s case. Godaddy Inc (NYSE:GDDY) is the most popular stock in this table. On the other hand LINE Corporation (NYSE:LN) is the least popular one with only 13 bullish hedge fund positions. VICI Properties Inc. (NYSE:VICI) 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately VICI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on VICI were disappointed as the stock returned -50.8% during the same time period 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.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
