Is VICI Properties Inc. (NYSE:VICI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
VICI Properties Inc. (NYSE:VICI) was in 37 hedge funds’ portfolios at the end of the first quarter of 2019. VICI investors should pay attention to a decrease in enthusiasm from smart money of late. There were 38 hedge funds in our database with VICI holdings at the end of the previous quarter. Our calculations also showed that vici isn’t among the 30 most popular stocks among hedge funds.
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s take a look at the key hedge fund action encompassing VICI Properties Inc. (NYSE:VICI).
Hedge fund activity in VICI Properties Inc. (NYSE:VICI)
At the end of the first quarter, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the fourth quarter of 2018. On the other hand, there were a total of 52 hedge funds with a bullish position in VICI a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, Canyon Capital Advisors was the largest shareholder of VICI Properties Inc. (NYSE:VICI), with a stake worth $594.9 million reported as of the end of March. Trailing Canyon Capital Advisors was Soros Fund Management, which amassed a stake valued at $429.7 million. OZ Management, Pentwater Capital Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that VICI Properties Inc. (NYSE:VICI) has experienced falling interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that slashed their full holdings heading into Q3. At the top of the heap, Michael Weinstock’s Monarch Alternative Capital sold off the biggest investment of the 700 funds followed by Insider Monkey, worth about $129.9 million in stock. Edward A. Mule’s fund, Silver Point Capital, also dumped its stock, about $120.4 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds heading into Q3.
Let’s also examine hedge fund activity in other stocks similar to VICI Properties Inc. (NYSE:VICI). These stocks are Alleghany Corporation (NYSE:Y), Carvana Co. (NYSE:CVNA), DocuSign, Inc. (NASDAQ:DOCU), and Qorvo Inc (NASDAQ:QRVO). All of these stocks’ market caps resemble VICI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| Y | 23 | 306493 | 4 |
| CVNA | 41 | 1612623 | 7 |
| DOCU | 34 | 538816 | 11 |
| QRVO | 34 | 1200686 | 6 |
| Average | 33 | 914655 | 7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $915 million. That figure was $1927 million in VICI’s case. Carvana Co. (NYSE:CVNA) is the most popular stock in this table. On the other hand Alleghany Corporation (NYSE:Y) is the least popular one with only 23 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on VICI as the stock returned 2.2% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
