Were Hedge Funds Wrong About Piling Into Las Vegas Sands Corp. (LVS)?

While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Las Vegas Sands Corp. (NYSE:LVS).

Las Vegas Sands Corp. (NYSE:LVS) was in 47 hedge funds’ portfolios at the end of June. The all time high for this statistics is 44. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. LVS has experienced an increase in hedge fund interest recently. There were 42 hedge funds in our database with LVS holdings at the end of March. Our calculations also showed that LVS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most traders, hedge funds are perceived as slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, Our experts choose to focus on the top tier of this club, around 850 funds. It is estimated that this group of investors have their hands on the majority of the smart money’s total asset base, and by observing their matchless stock picks, Insider Monkey has revealed several investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 best artificial intelligence stocks to pick the best growth stocks to buy. 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 website to get excerpts of these letters in your inbox. Now we’re going to take a look at the latest hedge fund action surrounding Las Vegas Sands Corp. (NYSE:LVS).

What does smart money think about Las Vegas Sands Corp. (NYSE:LVS)?

At Q2’s end, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from the previous quarter. By comparison, 39 hedge funds held shares or bullish call options in LVS a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Daniel Sundheim’s D1 Capital Partners has the largest position in Las Vegas Sands Corp. (NYSE:LVS), worth close to $721.4 million, comprising 5.4% of its total 13F portfolio. On D1 Capital Partners’s heels is Viking Global, led by Andreas Halvorsen, holding a $506.6 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include Gabriel Plotkin’s Melvin Capital Management, Ken Griffin’s Citadel Investment Group and Steve Cohen’s Point72 Asset Management. In terms of the portfolio weights assigned to each position Cumberland Associates / Springowl Associates allocated the biggest weight to Las Vegas Sands Corp. (NYSE:LVS), around 33.92% of its 13F portfolio. D1 Capital Partners is also relatively very bullish on the stock, setting aside 5.38 percent of its 13F equity portfolio to LVS.

As aggregate interest increased, key hedge funds have been driving this bullishness. Long Pond Capital, managed by John Khoury, established the largest position in Las Vegas Sands Corp. (NYSE:LVS). Long Pond Capital had $87.7 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $36.9 million position during the quarter. The other funds with new positions in the stock are John Brennan’s Sirios Capital Management, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Las Vegas Sands Corp. (NYSE:LVS) but similarly valued. We will take a look at Canadian Pacific Railway Limited (NYSE:CP), Eni SpA (NYSE:E), Kinder Morgan Inc (NYSE:KMI), Sempra Energy (NYSE:SRE), Snap Inc. (NYSE:SNAP), The Bank of New York Mellon Corporation (NYSE:BK), and Bank of Montreal (NYSE:BMO). All of these stocks’ market caps resemble LVS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.1 hedge funds with bullish positions and the average amount invested in these stocks was $1364 million. That figure was $2397 million in LVS’s case. Kinder Morgan Inc (NYSE:KMI) is the most popular stock in this table. On the other hand Eni SpA (NYSE:E) is the least popular one with only 8 bullish hedge fund positions. Las Vegas Sands Corp. (NYSE:LVS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LVS is 86.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and beat the market by 21 percentage points. Unfortunately LVS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on LVS were disappointed as the stock returned 11.3% since the end of June (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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