Las Vegas Sands (NYSE:LVS) followed up big gains on June 30 with further increases in trading this afternoon, gaining another 3.06%. Las Vegas Sands, which is a casino operator with the bulk of its operations in Macau, stands to benefit greatly from the government of China’s decision to relax some of its VISA rules for its traveling citizens. Previous rules regarding the length of time tourists were allowed to stay in Macau had visiting length capped at five days, down from 14 previously. While the original number will not be restored, the limits have been loosened to seven days. The shares of numerous casino operators in the region were up yesterday on the news, including Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL), which outpaced the rest as the best Macau pure play stock. Melco has also had a strong follow-up today, gaining another 4%.
Considering the recent developments and the expectations that the worst has come and gone for the struggling Macau gaming industry, which just wrapped up an extremely poor year in which gross gaming revenues fell by 38%, it is fair to consider Las Vegas Sands as a good bounce-back stock candidate. The bounce-back wasn’t being banked on by the smart money during the first quarter, as the number of long hedge fund bets dropped during that time. Las Vegas Sands (NYSE:LVS) was in 33 hedge funds’ portfolios at the end of December, with the funds holding $495 million worth of stock. That number decreased to 24 hedge funds holding $390 million worth of stock by the end of March.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 135% and beating the market by more than 80 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
Insider activity is another important parameter to consider when attempting to judge a stock’s worthiness. The latest insider activity for Las Vegas Sands Corp. (NYSE:LVS) shows that there were a few insider sales in 2015, with President and COO Robert Goldstein selling 200,000 shares in three transactions in 2015, while Director Michael Leven has sold over 60,000 shares in two transactions this year.
What have hedge funds been doing with Las Vegas Sands Corp. (NYSE:LVS)?
With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings substantially.
According to hedge fund intelligence website Insider Monkey, Jericho Capital Asset Management, managed by Josh Resnick, holds the number one position in Las Vegas Sands Corp. (NYSE:LVS). Jericho Capital Asset Management has a $61.8 million position in the stock, comprising 4.1% of its 13F portfolio. The second-largest stake is held by Joel Greenblatt of Gotham Asset Management, with a $57 million position; 0.4% of its 13F portfolio is allocated to the stock. Remaining hedgies that hold long positions include Murray Stahl’s Horizon Asset Management, and Matthew Hulsizer’s PEAK6 Capital Management.
With Las Vegas Sands (LVS) potential turnaround on the tables in Macau (and just in time for the opening of its $2.7 billion Parisian next year), I rate this stock as a definite buy. The strengths of this stock outweigh any weaknesses that are present within the company. This should allow for a greater opportunity for investors to gain a positive return. The strengths of LAS Vegas Sands (LVS) include expanding margins of its return on equity, and enhanced profits.
Disclosure: None
