Where Do Hedge Funds Stand On Penn National Gaming, Inc (PENN)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Penn National Gaming, Inc (NASDAQ:PENN).

Penn National Gaming, Inc (NASDAQ:PENN) was in 42 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 45. PENN investors should pay attention to an increase in enthusiasm from smart money of late. There were 41 hedge funds in our database with PENN holdings at the end of December. Our calculations also showed that PENN isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 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.

Alex Sacerdote of Whale Rock Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 we’re going to take a look at the fresh hedge fund action encompassing Penn National Gaming, Inc (NASDAQ:PENN).

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

At first quarter’s end, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in PENN a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Whale Rock Capital Management, managed by Alex Sacerdote, holds the biggest position in Penn National Gaming, Inc (NASDAQ:PENN). Whale Rock Capital Management has a $249.8 million position in the stock, comprising 2.1% of its 13F portfolio. The second most bullish fund manager is Citadel Investment Group, led by Ken Griffin, holding a $185 million call position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers that hold long positions consist of Stanley Druckenmiller’s Duquesne Capital, Israel Englander’s Millennium Management and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners. In terms of the portfolio weights assigned to each position Isomer Partners allocated the biggest weight to Penn National Gaming, Inc (NASDAQ:PENN), around 15.73% of its 13F portfolio. ThornTree Capital Partners is also relatively very bullish on the stock, setting aside 5.84 percent of its 13F equity portfolio to PENN.

As one would reasonably expect, specific money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the most outsized position in Penn National Gaming, Inc (NASDAQ:PENN). Millennium Management had $81 million invested in the company at the end of the quarter. Robert Pohly’s Samlyn Capital also made a $32.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, Parvinder Thiara’s Athanor Capital, and Hal Mintz’s Sabby Capital.

Let’s also examine hedge fund activity in other stocks similar to Penn National Gaming, Inc (NASDAQ:PENN). These stocks are Nomura Holdings, Inc. (NYSE:NMR), MongoDB, Inc. (NASDAQ:MDB), Principal Financial Group Inc (NASDAQ:PFG), Fomento Económico Mexicano, S.A.B. de C.V. (NYSE:FMX), Steris Plc (NYSE:STE), Varian Medical Systems, Inc. (NYSE:VAR), and Gartner Inc (NYSE:IT). This group of stocks’ market values are similar to PENN’s market value.

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As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $1159 million. That figure was $907 million in PENN’s case. MongoDB, Inc. (NASDAQ:MDB) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 10 bullish hedge fund positions. Penn National Gaming, Inc (NASDAQ:PENN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PENN is 78.4. 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 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 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately PENN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PENN were disappointed as the stock returned -29.6% since the end of March (through 6/18) 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 many of these stocks already outperformed the market since 2019.

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