In this article we will take a look at whether hedge funds think Caesars Entertainment Corp (NASDAQ:CZR) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Caesars Entertainment Corp (NASDAQ:CZR) was in 47 hedge funds' portfolios at the end of the first quarter of 2020. CZR shareholders have witnessed an increase in activity from the world's largest hedge funds lately. There were 46 hedge funds in our database with CZR positions at the end of the previous quarter. Our calculations also showed that CZR 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_324853" align="aligncenter" width="397"] Joshua Friedman of Canyon Capital Advisors[/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“. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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. With all of this in mind we're going to take a look at the recent hedge fund action regarding Caesars Entertainment Corp (NASDAQ:CZR).
How have hedgies been trading Caesars Entertainment Corp (NASDAQ:CZR)?
At the end of the first quarter, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from one quarter earlier. By comparison, 57 hedge funds held shares or bullish call options in CZR 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.
Among these funds, Icahn Capital LP held the most valuable stake in Caesars Entertainment Corp (NASDAQ:CZR), which was worth $772.3 million at the end of the third quarter. On the second spot was Canyon Capital Advisors which amassed $306.6 million worth of shares. Falcon Edge Capital, Oaktree Capital Management, and HG Vora Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Falcon Edge Capital allocated the biggest weight to Caesars Entertainment Corp (NASDAQ:CZR), around 12.52% of its 13F portfolio. Canyon Capital Advisors is also relatively very bullish on the stock, dishing out 10.83 percent of its 13F equity portfolio to CZR.
As industrywide interest jumped, key hedge funds have been driving this bullishness. HG Vora Capital Management, managed by Parag Vora, initiated the largest position in Caesars Entertainment Corp (NASDAQ:CZR). HG Vora Capital Management had $101.4 million invested in the company at the end of the quarter. Simon Davies's Sand Grove Capital Partners also made a $58.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Carl Tiedemann and Michael Tiedemann's TIG Advisors, Steven Clark's Omni Partners, and Steve Cohen's Point72 Asset Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Caesars Entertainment Corp (NASDAQ:CZR) but similarly valued. We will take a look at HD Supply Holdings Inc (NASDAQ:HDS), Euronet Worldwide, Inc. (NASDAQ:EEFT), Enel Chile S.A. (NYSE:ENIC), and Forty Seven, Inc. (NASDAQ:FTSV). All of these stocks' market caps are closest to CZR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HDS,40,856283,2 EEFT,30,240212,-17 ENIC,8,17690,2 FTSV,40,1084502,22 Average,29.5,549672,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.5 hedge funds with bullish positions and the average amount invested in these stocks was $550 million. That figure was $2041 million in CZR's case. HD Supply Holdings Inc (NASDAQ:HDS) is the most popular stock in this table. On the other hand Enel Chile S.A. (NYSE:ENIC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Caesars Entertainment Corp (NASDAQ:CZR) 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 CZR as the stock returned 64.3% 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.