Is BYD Stock A Buy or Sell?

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Boyd Gaming Corporation (NYSE:BYD).

Is BYD stock a buy? Hedge fund interest in Boyd Gaming Corporation (NYSE:BYD) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that BYD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Synovus Financial Corp. (NYSE:SNV), Pilgrim’s Pride Corporation (NASDAQ:PPC), and Penske Automotive Group, Inc. (NYSE:PAG) to gather more data points.

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 S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).

John Overdeck of Two Sigma Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s check out the key hedge fund action surrounding Boyd Gaming Corporation (NYSE:BYD).

Do Hedge Funds Think BYD Is A Good Stock To Buy Now?

At the end of December, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 30 hedge funds with a bullish position in BYD a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Boyd Gaming Corporation (NYSE:BYD) was held by GAMCO Investors, which reported holding $57.9 million worth of stock at the end of December. It was followed by HG Vora Capital Management with a $53.7 million position. Other investors bullish on the company included Contrarius Investment Management, Senator Investment Group, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Franklin Street Capital allocated the biggest weight to Boyd Gaming Corporation (NYSE:BYD), around 4.22% of its 13F portfolio. HG Vora Capital Management is also relatively very bullish on the stock, designating 4.16 percent of its 13F equity portfolio to BYD.

Seeing as Boyd Gaming Corporation (NYSE:BYD) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of funds that decided to sell off their entire stakes last quarter. Intriguingly, Paul Reeder and Edward Shapiro’s PAR Capital Management dumped the biggest position of the 750 funds monitored by Insider Monkey, worth an estimated $52.3 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund cut about $19.2 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Boyd Gaming Corporation (NYSE:BYD). These stocks are Synovus Financial Corp. (NYSE:SNV), Pilgrim’s Pride Corporation (NASDAQ:PPC), Penske Automotive Group, Inc. (NYSE:PAG), Builders FirstSource, Inc. (NASDAQ:BLDR), Cirrus Logic, Inc. (NASDAQ:CRUS), Bloom Energy Corporation (NYSE:BE), and Qualys Inc (NASDAQ:QLYS). This group of stocks’ market caps match BYD’s market cap.

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As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $286 million. That figure was $276 million in BYD’s case. Builders FirstSource, Inc. (NASDAQ:BLDR) is the most popular stock in this table. On the other hand Pilgrim’s Pride Corporation (NASDAQ:PPC) is the least popular one with only 17 bullish hedge fund positions. Boyd Gaming Corporation (NYSE:BYD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BYD is 57.2. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on BYD as the stock returned 48.6% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.

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