Were Hedge Funds Right About Piling Into Wynn Resorts (WYNN)?

In this article we will analyze whether Wynn Resorts, Limited (NASDAQ:WYNN) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Wynn Resorts, Limited (NASDAQ:WYNN) investors should pay attention to an increase in hedge fund sentiment recently. Wynn Resorts, Limited (NASDAQ:WYNN) was in 52 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 50. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WYNN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Gil Simon of SoMa Equity Partners

At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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. With all of this in mind let’s take a glance at the latest hedge fund action encompassing Wynn Resorts, Limited (NASDAQ:WYNN).

Do Hedge Funds Think WYNN Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the previous quarter. On the other hand, there were a total of 44 hedge funds with a bullish position in WYNN 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.

Among these funds, SoMa Equity Partners held the most valuable stake in Wynn Resorts, Limited (NASDAQ:WYNN), which was worth $197.5 million at the end of the fourth quarter. On the second spot was Melvin Capital Management which amassed $158 million worth of shares. Iridian Asset Management, Coatue Management, and D E Shaw 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 1060 Capital Management allocated the biggest weight to Wynn Resorts, Limited (NASDAQ:WYNN), around 11.63% of its 13F portfolio. Rip Road Capital is also relatively very bullish on the stock, dishing out 7.27 percent of its 13F equity portfolio to WYNN.

There weren’t any hedge funds initiating brand new positions in the stock during the fourth quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Wynn Resorts, Limited (NASDAQ:WYNN) but similarly valued. These stocks are Graco Inc. (NYSE:GGG), Qiagen NV (NYSE:QGEN), Atmos Energy Corporation (NYSE:ATO), Booz Allen Hamilton Holding Corporation (NYSE:BAH), PPD, Inc. (NASDAQ:PPD), IPG Photonics Corporation (NASDAQ:IPGP), and Sibanye Stillwater Limited (NYSE:SBSW). This group of stocks’ market values are similar to WYNN’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.6 hedge funds with bullish positions and the average amount invested in these stocks was $432 million. That figure was $1104 million in WYNN’s case. PPD, Inc. (NASDAQ:PPD) is the most popular stock in this table. On the other hand Sibanye Stillwater Limited (NYSE:SBSW) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Wynn Resorts, Limited (NASDAQ:WYNN) is more popular among hedge funds. Our overall hedge fund sentiment score for WYNN 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks returned 13.6% in 2021 through April 30th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on WYNN as the stock returned 13.8% since the end of December (through 4/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Disclosure: None. This article was originally published at Insider Monkey.