At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost Group, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of the mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Pinnacle Entertainment, Inc (NYSE:PNK) was in 30 hedge funds’ portfolios at the end of September. Pinnacle Entertainment, Inc investors should be aware of a decrease in enthusiasm from smart money of late. There were 34 hedge funds in our database with Pinnacle Entertainment, Inc positions at the end of the previous quarter. At the end of this article we will also compare Pinnacle Entertainment, Inc to other stocks including Group 1 Automotive, Inc. (NYSE:GPI), Imperva Inc (NYSE:IMPV), and Manitowoc Company, Inc. (NYSE:MTW) to get a better sense of its popularity.
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To most shareholders, hedge funds are assumed to be slow, outdated investment vehicles of yesteryear. While there are greater than 8,000 funds trading at the moment, our researchers look at the elite of this club, around 700 funds. These hedge fund managers orchestrate the lion’s share of the smart money’s total asset base, and by keeping track of their best equity investments, Insider Monkey has revealed several investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points annually for a decade in their back tests.
With all of this in mind, we’re going to analyze the new action surrounding Pinnacle Entertainment, Inc (NYSE:PNK).
Hedge fund activity in Pinnacle Entertainment, Inc (NYSE:PNK)
At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 12% drop from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings significantly (or had already accumulated large positions).
According to Insider Monkey’s hedge fund database, Parag Vora’s HG Vora Capital Management has the most valuable position in Pinnacle Entertainment, Inc (NYSE:PNK), worth close to $192.9 million, amounting to 23% of its total 13F portfolio. Coming in second is Paul Reeder and Edward Shapiro of PAR Capital Management, with a $51.5 million position; 1.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish include D E Shaw, Mark Kingdon’s Kingdon Capital, and Joshua Friedman and Mitchell Julis’ Canyon Capital Advisors.
Because Pinnacle Entertainment, Inc (NYSE:PNK) has experienced falling interest from the smart money, it’s easy to see that there lies a certain “tier” of hedge funds that decided to sell off their entire stakes last quarter. It’s worth mentioning that Daniel Lewis’ Orange Capital dumped the biggest stake of all the hedgies tracked by Insider Monkey, totaling an estimated $65.8 million in stock, and Josh Resnick’s Jericho Capital Asset Management was right behind this move, as the fund cut about $36.8 million worth of shares. These bearish behaviors are interesting, as total hedge fund interest was cut by 4 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Pinnacle Entertainment, Inc (NYSE:PNK). These stocks are Group 1 Automotive, Inc. (NYSE:GPI), Imperva Inc (NYSE:IMPV), Manitowoc Company, Inc. (NYSE:MTW), and Paycom Software Inc (NYSE:PAYC). This group of stocks’ market values are similar to Pinnacle Entertainment, Inc’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GPI | 25 | 420964 | 11 |
| IMPV | 23 | 133672 | 0 |
| MTW | 21 | 938318 | -4 |
| PAYC | 19 | 82516 | 1 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $394 million. That figure was $584 million in Pinnacle Entertainment, Inc’s case. Group 1 Automotive, Inc. (NYSE:GPI) is the most popular stock in this table. On the other hand Paycom Software Inc (NYSE:PAYC) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Pinnacle Entertainment, Inc (NYSE:PNK) is more popular among hedge funds. Considering that hedge funds are still fond of this stock in relation to its market cap peers despite the small dip in ownership, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
