The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about MGM Resorts International (NYSE:MGM)?
MGM Resorts International (NYSE:MGM) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 50 hedge funds' portfolios at the end of March. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Post Holdings Inc (NYSE:POST), HubSpot Inc (NYSE:HUBS), and Royal Gold, Inc (NASDAQ:RGLD) to gather more data points. Our calculations also showed that MGM isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
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. 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 44 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_260193" align="aligncenter" width="400"] Keith Meister of Corvex Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. Also, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's check out the key hedge fund action encompassing MGM Resorts International (NYSE:MGM).
Hedge fund activity in MGM Resorts International (NYSE:MGM)
At Q1's end, a total of 50 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MGM over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in MGM Resorts International (NYSE:MGM) was held by Corvex Capital, which reported holding $264.8 million worth of stock at the end of September. It was followed by Eminence Capital with a $74.5 million position. Other investors bullish on the company included Blue Harbour Group, Canyon Capital Advisors, and Long Pond Capital. In terms of the portfolio weights assigned to each position Corvex Capital allocated the biggest weight to MGM Resorts International (NYSE:MGM), around 20.48% of its 13F portfolio. Blue Harbour Group is also relatively very bullish on the stock, designating 12.21 percent of its 13F equity portfolio to MGM.
Due to the fact that MGM Resorts International (NYSE:MGM) has experienced bearish sentiment from hedge fund managers, it's easy to see that there were a few hedgies that slashed their positions entirely in the third quarter. It's worth mentioning that Parag Vora's HG Vora Capital Management cut the biggest investment of all the hedgies tracked by Insider Monkey, worth close to $66.5 million in stock. Noam Gottesman's fund, GLG Partners, also dropped its stock, about $31.9 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks similar to MGM Resorts International (NYSE:MGM). These stocks are Post Holdings Inc (NYSE:POST), HubSpot Inc (NYSE:HUBS), Royal Gold, Inc (NASDAQ:RGLD), and AGNC Investment Corp. (NASDAQ:AGNC). All of these stocks' market caps match MGM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position POST,31,1195411,-7 HUBS,27,662117,-3 RGLD,28,237256,-2 AGNC,27,302699,6 Average,28.25,599371,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.25 hedge funds with bullish positions and the average amount invested in these stocks was $599 million. That figure was $943 million in MGM's case. Post Holdings Inc (NYSE:POST) is the most popular stock in this table. On the other hand HubSpot Inc (NYSE:HUBS) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks MGM Resorts International (NYSE:MGM) is more popular among hedge funds. 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 returned 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on MGM as the stock returned 34.7% so far in Q2 (through May 22nd) 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.