In this article we will check out the progression of hedge fund sentiment towards VICI Properties Inc. (NYSE:VICI) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is VICI Properties Inc. (NYSE:VICI) a buy right now? The smart money was taking a pessimistic view. The number of long hedge fund bets retreated by 4 in recent months. VICI Properties Inc. (NYSE:VICI) was in 37 hedge funds’ portfolios at the end of June. The all time high for this statistic is 59. Our calculations also showed that VICI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 41 hedge funds in our database with VICI positions at the end of the first quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jeffrey Gates of Gates Capital
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Do Hedge Funds Think VICI Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. By comparison, 51 hedge funds held shares or bullish call options in VICI a year ago. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, D E Shaw was the largest shareholder of VICI Properties Inc. (NYSE:VICI), with a stake worth $112.2 million reported as of the end of June. Trailing D E Shaw was Gates Capital Management, which amassed a stake valued at $109.9 million. Parsifal Capital Management, Hein Park Capital, and Citadel Investment Group 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 Hein Park Capital allocated the biggest weight to VICI Properties Inc. (NYSE:VICI), around 12.33% of its 13F portfolio. Parsifal Capital Management is also relatively very bullish on the stock, setting aside 7.27 percent of its 13F equity portfolio to VICI.
Seeing as VICI Properties Inc. (NYSE:VICI) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of money managers that slashed their full holdings in the second quarter. At the top of the heap, John Khoury’s Long Pond Capital sold off the biggest investment of the “upper crust” of funds monitored by Insider Monkey, totaling about $26.8 million in stock, and Brian J. Higgins’s King Street Capital was right behind this move, as the fund dropped about $22.6 million worth. These transactions are important to note, as total hedge fund interest fell by 4 funds in the second quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as VICI Properties Inc. (NYSE:VICI) but similarly valued. We will take a look at Dynatrace, Inc. (NYSE:DT), Cardinal Health, Inc. (NYSE:CAH), PTC Inc (NASDAQ:PTC), The Carlyle Group Inc (NASDAQ:CG), Brookfield Infrastructure Partners L.P. (NYSE:BIP), Elanco Animal Health Incorporated (NYSE:ELAN), and Wix.Com Ltd (NASDAQ:WIX). This group of stocks’ market values are similar to VICI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DT | 50 | 1949953 | -2 |
| CAH | 40 | 897223 | 1 |
| PTC | 31 | 1958876 | -2 |
| CG | 21 | 601725 | -5 |
| BIP | 16 | 71356 | 4 |
| ELAN | 42 | 1996818 | 0 |
| WIX | 35 | 1381019 | -5 |
| Average | 33.6 | 1265281 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.6 hedge funds with bullish positions and the average amount invested in these stocks was $1265 million. That figure was $665 million in VICI’s case. Dynatrace, Inc. (NYSE:DT) is the most popular stock in this table. On the other hand Brookfield Infrastructure Partners L.P. (NYSE:BIP) is the least popular one with only 16 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 overall hedge fund sentiment score for VICI is 50.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately VICI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VICI were disappointed as the stock returned -4.4% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
