In this article we are going to use hedge fund sentiment as a tool and determine whether Caesars Entertainment Inc. (NASDAQ:CZR) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Caesars Entertainment Inc. (NASDAQ:CZR) ready to rally soon? The smart money was in an optimistic mood. The number of bullish hedge fund positions improved by 5 recently. Caesars Entertainment Inc. (NASDAQ:CZR) was in 76 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 74. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CZR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 71 hedge funds in our database with CZR positions at the end of the fourth quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Jeffrey Gates of Gates Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a look at the fresh hedge fund action regarding Caesars Entertainment Inc. (NASDAQ:CZR).
Do Hedge Funds Think CZR Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 76 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. By comparison, 39 hedge funds held shares or bullish call options in CZR a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Samlyn Capital, managed by Robert Pohly, holds the largest position in Caesars Entertainment Inc. (NASDAQ:CZR). Samlyn Capital has a $116.8 million position in the stock, comprising 1.6% of its 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $94.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions contain Josh Resnick’s Jericho Capital Asset Management, Jeffrey Gates’s Gates Capital Management and Gaurav Kapadia’s XN Exponent Advisors. In terms of the portfolio weights assigned to each position Lafitte Capital Management allocated the biggest weight to Caesars Entertainment Inc. (NASDAQ:CZR), around 35.06% of its 13F portfolio. Toscafund Asset Management is also relatively very bullish on the stock, designating 9.47 percent of its 13F equity portfolio to CZR.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. XN Exponent Advisors, managed by Gaurav Kapadia, created the most outsized position in Caesars Entertainment Inc. (NASDAQ:CZR). XN Exponent Advisors had $81.8 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also initiated a $29.1 million position during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, Gregg Moskowitz’s Interval Partners, and Anthony Joseph Vaccarino’s North Fourth Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Caesars Entertainment Inc. (NASDAQ:CZR) but similarly valued. These stocks are Affirm Holdings, Inc. (NASDAQ:AFRM), Expeditors International of Washington (NASDAQ:EXPD), Rogers Communications Inc. (NYSE:RCI), Invitation Homes Inc. (NYSE:INVH), SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), Catalent Inc (NYSE:CTLT), and The AES Corporation (NYSE:AES). This group of stocks’ market caps resemble CZR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AFRM | 32 | 582516 | 32 |
| EXPD | 21 | 440396 | -4 |
| RCI | 18 | 289168 | 3 |
| INVH | 28 | 1174443 | 1 |
| SSNC | 54 | 2671021 | 5 |
| CTLT | 29 | 1016499 | -6 |
| AES | 51 | 1541608 | 13 |
| Average | 33.3 | 1102236 | 6.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.3 hedge funds with bullish positions and the average amount invested in these stocks was $1102 million. That figure was $1520 million in CZR’s case. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is the most popular stock in this table. On the other hand Rogers Communications Inc. (NYSE:RCI) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Caesars Entertainment Inc. (NASDAQ:CZR) is more popular among hedge funds. Our overall hedge fund sentiment score for CZR is 90. 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. 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 25.8% in 2021 through August 6th and still beat the market by 6.7 percentage points. Unfortunately CZR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CZR were disappointed as the stock returned 3.5% since the end of the first quarter (through 8/6) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
