Is Gaming and Leisure Properties Inc (GLPI) a Good Buy?

Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 5.2% in the 12 months ending October 30, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of September 2014) generated a return of 9.5% during the same 12-month period, with 63% of these stock picks outperformed the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 16-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Gaming and Leisure Properties Inc (NASDAQ:GLPI).

Is Gaming and Leisure Properties Inc (NASDAQ:GLPI) a first-rate investment now? Hedge funds are becoming less confident. The number of long hedge fund bets were trimmed by 4 lately. GLPI was in 28 hedge funds’ portfolios at the end of September. There were 32 hedge funds in our database with GLPI positions at the end of the previous quarter. At the end of this article we will also compare GLPI to other stocks including American Homes 4 Rent (NYSE:AMH), Dillard’s, Inc. (NYSE:DDS), and Kirby Corporation (NYSE:KEX) to get a better sense of its popularity.

Now, let’s review the latest action encompassing Gaming and Leisure Properties Inc (NASDAQ:GLPI).

What have hedge funds been doing with Gaming and Leisure Properties Inc (NASDAQ:GLPI)?

Heading into Q4, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Michael Novogratz’s Fortress Investment Group has the biggest position in Gaming and Leisure Properties Inc (NASDAQ:GLPI), worth close to $311.9 million, accounting for 4.8% of its total 13F portfolio. The second most bullish fund manager is Gates Capital Management, managed by Jeffrey Gates, which holds a $178.8 million position; 6.9% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish contain Paul Reeder and Edward Shapiro’s PAR Capital Management, Martin D. Sass’s MD Sass and George Soros’ Soros Fund Management.

Judging by the fact that Gaming and Leisure Properties Inc (NASDAQ:GLPI) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that elected to cut their positions entirely by the end of the third quarter. Intriguingly, Leon Cooperman’s Omega Advisors cut the biggest stake of all the hedgies followed by Insider Monkey, totaling about $49.7 million in stock, and Parag Vora’s HG Vora Capital Management was right behind this move, as the fund dropped about $29.3 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 4 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Gaming and Leisure Properties Inc (NASDAQ:GLPI) but similarly valued. We will take a look at American Homes 4 Rent (NYSE:AMH), Dillard’s, Inc. (NYSE:DDS), Kirby Corporation (NYSE:KEX), and Atmel Corporation (NASDAQ:ATML). This group of stocks’ market values match GLPI’s market value.

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $383 million. That figure was $916 million in GLPI’s case. Atmel Corporation (NASDAQ:ATML) is the most popular stock in this table. On the other hand American Homes 4 Rent (NYSE:AMH) is the least popular one with only 16 bullish hedge fund positions. Gaming and Leisure Properties Inc (NASDAQ:GLPI) 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. In this regard ATML might be a better candidate to consider a long position.