HG Vora Bullish On Media, Entertainment Stocks

Parag Vora‘s event-driven and value-oriented private investment firm HG Vora Capital Management currently manages regulatory assets of over $2 billion. However, the fund’s latest 13F filing shows that only a small portion of that was invested in public U.S. equities at the end of the second quarter. According to the filing, HG Vora’s U.S equity portfolio contained 13 positions valued at a total of $442.60 million at the end of June. The filing also revealed that nearly 70% of the value of the fund’s equity portfolio was amassed by stocks from the consumer discretionary sector, with media and entertainment stocks accounting for a major chunk of that.

Considering that the fund was quite bullish on those two industries going into the third quarter, we’ll focus on HG Vora’s top five stock picks from those spaces in this article and discuss the performance and prospects of those stocks.

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

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#5 New York Times Co (NYSE:NYT)

– Shares Owned by HG Vora Capital Management (as of June 30): 1.95 Million

– Value of Holding (as of June 30): $23.6 Million

HG Vora reduced its stake in New York Times Co (NYSE:NYT) by 15% during the second quarter. New York Times’ stock has lost almost 10% of its value so far in 2016, but that has helped push up its forward yield to 1.3%. In August, the company acquired marketing firm Fake Love for an undisclosed sum of money to boost its branded-content efforts. Within a few days of that announcement, New York Times Co (NYSE:NYT) revealed that it is shutting down the NYT Now mobile app, 28 months after launching it, as it failed to generate the amount of paid subscriptions originally anticipated by the company. For its second quarter, NYT reported a 12% year-over-year drop in ad revenue, with declines in both its print and digital segments. 22 hedge funds in our system were shareholders of New York Times at the end of June, owning $282 million worth of its shares.

#4 tronc Inc (NASDAQ:TRNC)

– Shares Owned by HG Vora Capital Management (as of June 30): 3.62 Million

– Value of Holding (as of June 30): $50 Million

tronc Inc (NASDAQ:TRNC) was a new entrant to HG Vora’s equity portfolio during the second quarter. Earlier known as Tribune Publishing Co., the publishing company changed its name as part of a rebranding effort in June and has now migrated towards being a content curation and monetization company focused on creating and distributing premium content. Since the beginning of 2016, tronc Inc (NASDAQ:TRNC)’s stock has appreciated by 86.9%, with a large part of those gains coming on the back of Gannett Co Inc (NYSE:GCI)’s attempted takeover of the company. Though tronc’s Board has thus far avoided Gannett’s advances, recent reports suggest that the latter has hiked its offer to as much as $19 per share from $15 and that the former’s shareholders are uniting to pressure the Board to accept the offer. At the end of June, there were 13 hedge funds in our database long tronc, with the aggregate value of their holdings in it amounting to $129.62 million.

Three more stocks that Parag Vora is bullish on are examined on page two of this article.

#3 Pinnacle Entertainment Inc (NASDAQ:PNK)

– Shares Owned by HG Vora Capital Management (as of June 30): 5.05 Million

– Value of Holding (as of June 30): $56 Million

Pinnacle Entertainment Inc (NASDAQ:PNK) is another stock that made its debut in HG Vora’s equity portfolio during the second quarter. Earlier this year, the company completed the spinoff of most of its real-estate assets, which were acquired by Gaming and Leisure Properties Inc (NASDAQ:GLPI). Since then, Pinnacle Entertainment Inc (NASDAQ:PNK)’s stock has appreciated by 21%. In August, the company authorized a new $50 million stock repurchase program, which it plans to fund without increasing its debt leverage profile. On August 22, analysts at Bank of America initiated coverage of the stock with a ‘Buy’ rating and $15 price target, which represents potential upside of 17.9%. The number of hedge funds that we track which were long Pinnacle Entertainment declined by eight during the second quarter, to 21, while the aggregate value of their holdings in it fell by $441 million to $206.93 million.

#2 MGM Resorts International (NYSE:MGM)

– Shares Owned by HG Vora Capital Management (as of June 30): 2.7 Million

– Value of Holding (as of June 30): $61.1 Million

Moving on, HG Vora lowered its stake in MGM Resorts International (NYSE:MGM) by 44% during the second quarter. Shares of the casino operator are currently trading up by 17.85% year-to-date, led by positive revenue trends in Las Vegas and Macau. For its most recent quarter, the company reported EPS of $0.26 on revenue of $2.45 billion, missing analysts’ EPS expectations of $0.28 but topping their revenue estimates of $2.33 billion. Earlier this month, analysts at Gabelli released a note in which they once again called MGM Resorts International (NYSE:MGM) one of their top ideas. The firm currently has a ‘Buy’ rating and $39 price target on the stock, which represents potential upside of 45.5%. The collection of hedge funds in our system were also bullish on the company going into the third quarter, as 59 of them were long MGM at the end of June, up by four quarter-over-quarter.

#1 Hilton Worldwide Holdings Inc (NYSE:HLT)

– Shares Owned by HG Vora Capital Management (as of June 30): 2.75 Million

– Value of Holding (as of June 30): $62 Million

Though HG Vora reduced its stake in Hilton Worldwide Holdings Inc (NYSE:HLT) by 5% during the second quarter, the company jumped two spots in the fund’s portfolio to become its top stock pick at the end of June. Other hedge funds that also reduced their stake in Hilton Worldwide Holdings Inc (NYSE:HLT) during the second quarter included Jeffrey Furber‘s AEW Capital Management and John Khoury‘s Long Pond Capital. Shares of the hospitality major took a major beating last year, but have managed to recoup some of those losses in 2016, as they are currently trading up 5.47% year-to-date. Most analysts who track the company are currently bullish on it, as the stock currently sports an average rating of ‘Overweight’ and an average price target of $26.42 from the 25 leading analysts on the Street who cover it. Ownership of Hilton among the hedge funds that we follow declined drastically during the June quarter, to 27 from 42. However, the aggregate value of their holdings in it rose by 31.3% to $1.96 billion during that time.

Disclosure: None