Penn National Gaming, Inc (PENN): Are Hedge Funds Right About This Stock?

Penn National Gaming, Inc (NASDAQ:PENN) was in 31 hedge funds’ portfolio at the end of March. PENN investors should pay attention to a decrease in support from the world’s most elite money managers of late. There were 31 hedge funds in our database with PENN positions at the end of the previous quarter.

If you’d ask most investors, hedge funds are viewed as slow, old investment tools of yesteryear. While there are more than 8000 funds trading at the moment, we hone in on the bigwigs of this club, about 450 funds. It is estimated that this group has its hands on the lion’s share of all hedge funds’ total asset base, and by tracking their top equity investments, we have found a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as key, optimistic insider trading sentiment is another way to parse down the marketplace. Just as you’d expect, there are many stimuli for an upper level exec to get rid of shares of his or her company, but only one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the useful potential of this method if “monkeys” understand where to look (learn more here).

Keeping this in mind, we’re going to take a glance at the latest action encompassing Penn National Gaming, Inc (NASDAQ:PENN).

How are hedge funds trading Penn National Gaming, Inc (NASDAQ:PENN)?

In preparation for this quarter, a total of 31 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably.

According to our comprehensive database, PAR Capital Management, managed by Paul Reeder and Edward Shapiro, holds the most valuable position in Penn National Gaming, Inc (NASDAQ:PENN). PAR Capital Management has a $163.9 million position in the stock, comprising 5.2% of its 13F portfolio. Sitting at the No. 2 spot is Christian Leone of Luxor Capital Group, with a $155.5 million position; 3% of its 13F portfolio is allocated to the stock. Other hedge funds that hold long positions include Dmitry Balyasny’s Balyasny Asset Management, Michael A. Price and Amos Meron’s Empyrean Capital Partners and Frank Brosens’s Taconic Capital.

Seeing as Penn National Gaming, Inc (NASDAQ:PENN) has experienced declining sentiment from hedge fund managers, we can see that there exists a select few funds who sold off their full holdings heading into Q2. Intriguingly, John Murphy’s Alydar Capital sold off the largest stake of the 450+ funds we monitor, valued at an estimated $9.8 million in stock., and John Wu of Sureview Capital was right behind this move, as the fund said goodbye to about $7.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with Penn National Gaming, Inc (NASDAQ:PENN)?

Insider purchases made by high-level executives is best served when the company in focus has experienced transactions within the past six months. Over the last half-year time period, Penn National Gaming, Inc (NASDAQ:PENN) has experienced 3 unique insiders buying, and 8 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Penn National Gaming, Inc (NASDAQ:PENN). These stocks are Marriott Vacations Worldwide Corp (NYSE:VAC), Caesars Entertainment Corp (NASDAQ:CZR), Vail Resorts, Inc. (NYSE:MTN), Royal Caribbean Cruises Ltd. (NYSE:RCL), and MGM Resorts International (NYSE:MGM). This group of stocks are the members of the resorts & casinos industry and their market caps match PENN’s market cap.

With the returns exhibited by Insider Monkey’s time-tested strategies, retail investors should always monitor hedge fund and insider trading activity, and Penn National Gaming, Inc (NASDAQ:PENN) is no exception.

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