U.S. Markets close in 1 hr 24 mins

SciPlay Corporation (SCPL): Hedge Funds In Wait-and-See Mode

Debasis Saha

How do we determine whether SciPlay Corporation (NASDAQ:SCPL) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.

SciPlay Corporation (NASDAQ:SCPL) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 16 hedge funds' portfolios at the end of September. At the end of this article we will also compare SCPL to other stocks including Denny's Corporation (NASDAQ:DENN), Oceaneering International (NYSE:OII), and Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

At the moment there are a lot of tools stock market investors use to grade stocks. A couple of the best tools are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the top fund managers can beat the market by a significant margin (see the details here).

[caption id="attachment_258236" align="alignnone" width="600"] Ken Griffin of Citadel Investment Group[/caption]

Ken Griffin

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a look at the key hedge fund action surrounding SciPlay Corporation (NASDAQ:SCPL).

Hedge fund activity in SciPlay Corporation (NASDAQ:SCPL)

Heading into the fourth quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards SCPL over the last 17 quarters. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

Is SCPL A Good Stock To Buy?

The largest stake in SciPlay Corporation (NASDAQ:SCPL) was held by Park West Asset Management, which reported holding $35.6 million worth of stock at the end of September. It was followed by SG Capital Management with a $20 million position. Other investors bullish on the company included Citadel Investment Group, EastBay Asset Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position EastBay Asset Management allocated the biggest weight to SciPlay Corporation (NASDAQ:SCPL), around 11.22% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, setting aside 3.78 percent of its 13F equity portfolio to SCPL.

Judging by the fact that SciPlay Corporation (NASDAQ:SCPL) has faced bearish sentiment from the smart money, logic holds that there were a few money managers who were dropping their full holdings by the end of the third quarter. At the top of the heap, Robert Pohly's Samlyn Capital sold off the largest position of the "upper crust" of funds monitored by Insider Monkey, valued at an estimated $10.2 million in stock. Anand Parekh's fund, Alyeska Investment Group, also dumped its stock, about $7.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as SciPlay Corporation (NASDAQ:SCPL) but similarly valued. We will take a look at Denny's Corporation (NASDAQ:DENN), Oceaneering International (NYSE:OII), Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), and Ping Identity Holding Corp. (NYSE:PING). All of these stocks' market caps are similar to SCPL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DENN,20,221074,3 OII,19,191225,4 IRWD,22,249690,1 PING, 18, 70018, 18 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $183 million. That figure was $82 million in SCPL's case. Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) is the most popular stock in this table. On the other hand Ping Identity Holding Corp. (NYSE:PING) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks SciPlay Corporation (NASDAQ:SCPL) is even less popular than PING. 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. A small number of hedge funds were also right about betting on SCPL, though not to the same extent, as the stock returned 10.1% during the fourth quarter (through 11/30) and outperformed the market as well.

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

Related Content