With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Boyd Gaming Corporation (NYSE:BYD). Below we will compare BYD against similarly valued stocks such as DouYu International Holdings Limited (NASDAQ:DOYU), Power Integrations Inc (NASDAQ:POWI), Pattern Energy Group Inc (NASDAQ:PEGI), and BlackLine, Inc. (NASDAQ:BL).
Boyd Gaming Corporation (NYSE:BYD) has seen a decrease in hedge fund interest lately. BYD was in 25 hedge funds' portfolios at the end of the third quarter of 2019. There were 30 hedge funds in our database with BYD positions at the end of the previous quarter. Our calculations also showed that BYD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_375529" align="aligncenter" width="450"] Mario Gabelli of GAMCO Investors[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's view the fresh hedge fund action encompassing Boyd Gaming Corporation (NYSE:BYD).
What does smart money think about Boyd Gaming Corporation (NYSE:BYD)?
Heading into the fourth quarter of 2019, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in BYD over the last 17 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, PAR Capital Management, managed by Paul Reeder, holds the largest position in Boyd Gaming Corporation (NYSE:BYD). PAR Capital Management has a $58.1 million position in the stock, comprising 1% of its 13F portfolio. The second most bullish fund manager is Mario Gabelli of GAMCO Investors, with a $39.3 million position; 0.3% of its 13F portfolio is allocated to the stock. Other peers that are bullish encompass Daniel Lascano's Lomas Capital Management, John Khoury's Long Pond Capital and Jacob Doft's Highline Capital Management. In terms of the portfolio weights assigned to each position Diametric Capital allocated the biggest weight to Boyd Gaming Corporation (NYSE:BYD), around 3.56% of its portfolio. Lomas Capital Management is also relatively very bullish on the stock, earmarking 3.29 percent of its 13F equity portfolio to BYD.
Since Boyd Gaming Corporation (NYSE:BYD) has faced falling interest from hedge fund managers, we can see that there exists a select few money managers who sold off their full holdings by the end of the third quarter. Intriguingly, David Gallo's Valinor Management cut the largest stake of the "upper crust" of funds followed by Insider Monkey, totaling about $68.6 million in stock. Eduardo Abush's fund, Waterfront Capital Partners, also dumped its stock, about $10.6 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 5 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Boyd Gaming Corporation (NYSE:BYD) but similarly valued. We will take a look at DouYu International Holdings Limited (NASDAQ:DOYU), Power Integrations Inc (NASDAQ:POWI), Pattern Energy Group Inc (NASDAQ:PEGI), and BlackLine, Inc. (NASDAQ:BL). This group of stocks' market valuations match BYD's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DOYU,10,50432,10 POWI,12,97704,3 PEGI,13,51412,1 BL,14,125393,-1 Average,12.25,81235,3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $81 million. That figure was $215 million in BYD's case. BlackLine, Inc. (NASDAQ:BL) is the most popular stock in this table. On the other hand DouYu International Holdings Limited (NASDAQ:DOYU) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Boyd Gaming Corporation (NYSE:BYD) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on BYD as the stock returned 22.8% during the first two months of Q4 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.