Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Wynn Resorts, Limited (NASDAQ:WYNN) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Wynn Resorts, Limited (NASDAQ:WYNN) was in 32 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 52. WYNN investors should be aware of a decrease in hedge fund sentiment in recent months. There were 37 hedge funds in our database with WYNN positions at the end of the second quarter. Our calculations also showed that WYNN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now we’re going to take a look at the fresh hedge fund action surrounding Wynn Resorts, Limited (NASDAQ:WYNN).
Matthew Halbower of Pentwater Capital
Do Hedge Funds Think WYNN Is A Good Stock To Buy Now?
At the end of September, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the second quarter of 2021. On the other hand, there were a total of 43 hedge funds with a bullish position in WYNN a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Wynn Resorts, Limited (NASDAQ:WYNN). Citadel Investment Group has a $301.8 million call position in the stock, comprising 0.1% of its 13F portfolio. On Citadel Investment Group’s heels is Ken Griffin of Citadel Investment Group, with a $112.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism include Israel Englander’s Millennium Management, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital. In terms of the portfolio weights assigned to each position Prentice Capital Management allocated the biggest weight to Wynn Resorts, Limited (NASDAQ:WYNN), around 3.21% of its 13F portfolio. Bronson Point Partners is also relatively very bullish on the stock, designating 2.96 percent of its 13F equity portfolio to WYNN.
Because Wynn Resorts, Limited (NASDAQ:WYNN) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there exists a select few hedge funds that decided to sell off their full holdings heading into Q4. At the top of the heap, Gil Simon’s SoMa Equity Partners cut the biggest position of all the hedgies tracked by Insider Monkey, totaling an estimated $214 million in stock. David Cohen and Harold Levy’s fund, Iridian Asset Management, also dumped its stock, about $115.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 5 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Wynn Resorts, Limited (NASDAQ:WYNN). These stocks are CubeSmart (NYSE:CUBE), Penumbra Inc (NYSE:PEN), A. O. Smith Corporation (NYSE:AOS), Manhattan Associates, Inc. (NASDAQ:MANH), McAfee Corp. (NASDAQ:MCFE), CyrusOne Inc (NASDAQ:CONE), and Lithia Motors Inc (NYSE:LAD). This group of stocks’ market valuations resemble WYNN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CUBE | 22 | 225467 | 4 |
| PEN | 33 | 553799 | 3 |
| AOS | 29 | 564878 | 3 |
| MANH | 25 | 475224 | -3 |
| MCFE | 31 | 330697 | 13 |
| CONE | 27 | 495607 | 1 |
| LAD | 64 | 2823225 | 1 |
| Average | 33 | 781271 | 3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $781 million. That figure was $283 million in WYNN’s case. Lithia Motors Inc (NYSE:LAD) is the most popular stock in this table. On the other hand CubeSmart (NYSE:CUBE) is the least popular one with only 22 bullish hedge fund positions. Wynn Resorts, Limited (NASDAQ:WYNN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WYNN is 30.4. 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 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on WYNN as the stock returned 0.8% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
Follow Wynn Resorts Ltd (NASDAQ:WYNN)
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Disclosure: None. This article was originally published at Insider Monkey.
