Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ complex research processes to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we pay special attention to the hedge fund activity in the small-cap space. Nevertheless, it is also possible to find underpriced large-cap stocks by following the hedge funds’ moves. In this article, we look at what those funds think of Gaming and Leisure Properties Inc (NASDAQ:GLPI) based on that data.
Gaming and Leisure Properties Inc (NASDAQ:GLPI) has seen an increase in enthusiasm from smart money in recent months. Our calculations also showed that GLPI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now we’re going to take a peek at the key hedge fund action regarding Gaming and Leisure Properties Inc (NASDAQ:GLPI).
How are hedge funds trading Gaming and Leisure Properties Inc (NASDAQ:GLPI)?
At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GLPI over the last 17 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Gaming and Leisure Properties Inc (NASDAQ:GLPI), with a stake worth $281.8 million reported as of the end of September. Trailing Renaissance Technologies was Gates Capital Management, which amassed a stake valued at $117.9 million. Citadel Investment Group, Cardinal Capital, and Echo Street 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 Covalent Capital Partners allocated the biggest weight to Gaming and Leisure Properties Inc (NASDAQ:GLPI), around 12.57% of its 13F portfolio. Land & Buildings Investment Management is also relatively very bullish on the stock, setting aside 6.22 percent of its 13F equity portfolio to GLPI.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Ancora Advisors, managed by Frederick DiSanto, initiated the most outsized position in Gaming and Leisure Properties Inc (NASDAQ:GLPI). Ancora Advisors had $3.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace also made a $1.5 million investment in the stock during the quarter. The following funds were also among the new GLPI investors: Michael Gelband’s ExodusPoint Capital, Matthew Tewksbury’s Stevens Capital Management, and Noam Gottesman’s GLG Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Gaming and Leisure Properties Inc (NASDAQ:GLPI) but similarly valued. These stocks are National Oilwell Varco, Inc. (NYSE:NOV), Under Armour Inc (NYSE:UA), News Corp (NASDAQ:NWSA), and Coupa Software Incorporated (NASDAQ:COUP). This group of stocks’ market valuations are closest to GLPI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NOV | 23 | 894471 | 1 |
| UA | 32 | 921157 | -6 |
| NWSA | 30 | 428964 | 7 |
| COUP | 55 | 2562874 | -2 |
| Average | 35 | 1201867 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1202 million. That figure was $773 million in GLPI’s case. Coupa Software Incorporated (NASDAQ:COUP) is the most popular stock in this table. On the other hand National Oilwell Varco, Inc. (NYSE:NOV) is the least popular one with only 23 bullish hedge fund positions. Gaming and Leisure Properties Inc (NASDAQ:GLPI) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. A small number of hedge funds were also right about betting on GLPI as the stock returned 41.8% in 2019 through December 23rd and outperformed the market by an even larger margin.
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.
