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Is Esports Entertainment Group Inc. (GMBL) A Good Stock To Buy?

·6 min read

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Esports Entertainment Group Inc. (NASDAQ:GMBL) changed recently.

Is GMBL a good stock to buy? Esports Entertainment Group Inc. (NASDAQ:GMBL) was in 4 hedge funds' portfolios at the end of March. The all time high for this statistic is 1. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. GMBL investors should be aware of an increase in hedge fund interest of late. There were 1 hedge funds in our database with GMBL positions at the end of the fourth quarter. Our calculations also showed that GMBL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In today’s marketplace there are numerous metrics market participants employ to analyze publicly traded companies. A pair of the most under-the-radar metrics are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the best money managers can trounce their index-focused peers by a healthy amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .


Israel Englander of Millennium Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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 let's take a gander at the latest hedge fund action surrounding Esports Entertainment Group Inc. (NASDAQ:GMBL).

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

Heading into the second quarter of 2021, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 300% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in GMBL 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.

Is GMBL A Good Stock To Buy?
Is GMBL A Good Stock To Buy?

According to Insider Monkey's hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Esports Entertainment Group Inc. (NASDAQ:GMBL). Citadel Investment Group has a $2 million call position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which holds a $1.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions encompass Israel Englander's Millennium Management, Sander Gerber's Hudson Bay Capital Management and Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital). In terms of the portfolio weights assigned to each position Hudson Bay Capital Management allocated the biggest weight to Esports Entertainment Group Inc. (NASDAQ:GMBL), around 0.0046% of its 13F portfolio. Prelude Capital (previously Springbok Capital) is also relatively very bullish on the stock, setting aside 0.0039 percent of its 13F equity portfolio to GMBL.

As aggregate interest increased, some big names were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, created the most outsized call position in Esports Entertainment Group Inc. (NASDAQ:GMBL). Citadel Investment Group had $2 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $1.2 million position during the quarter. The following funds were also among the new GMBL investors: Israel Englander's Millennium Management, Sander Gerber's Hudson Bay Capital Management, and Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital).

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Esports Entertainment Group Inc. (NASDAQ:GMBL) but similarly valued. These stocks are Nathan's Famous, Inc. (NASDAQ:NATH), Akumin Inc. (NASDAQ:AKU), X Financial (NYSE:XYF), Atlantic Power Corp (NYSE:AT), Ciner Resources LP (NYSE:CINR), RedHill Biopharma Ltd (NASDAQ:RDHL), and Ondas Holdings Inc. (NASDAQ:ONDS). This group of stocks' market values resemble GMBL's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NATH,4,29713,-2 AKU,6,65789,0 XYF,4,2177,1 AT,21,35743,11 CINR,1,2313,0 RDHL,4,18799,1 ONDS,5,2690,2 Average,6.4,22461,1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.4 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $3 million in GMBL's case. Atlantic Power Corp (NYSE:AT) is the most popular stock in this table. On the other hand Ciner Resources LP (NYSE:CINR) is the least popular one with only 1 bullish hedge fund positions. Esports Entertainment Group Inc. (NASDAQ:GMBL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GMBL is 45.5. 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 negative signal and 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately GMBL wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); GMBL investors were disappointed as the stock returned -14.9% since the end of March (through 6/11) 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 in 2021.

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

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