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Were Hedge Funds Right About Golden Entertainment Inc (GDEN)?

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·6 min read
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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. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider Golden Entertainment Inc (NASDAQ:GDEN) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Golden Entertainment Inc (NASDAQ:GDEN) shareholders have witnessed an increase in support from the world's most elite money managers recently. Golden Entertainment Inc (NASDAQ:GDEN) was in 18 hedge funds' portfolios at the end of March. The all time high for this statistic was previously 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 13 hedge funds in our database with GDEN holdings at the end of December. Our calculations also showed that GDEN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Richard Driehaus of Driehaus Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. With all of this in mind we're going to view the recent hedge fund action surrounding Golden Entertainment Inc (NASDAQ:GDEN).

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

At first quarter's end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in GDEN over the last 23 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Is GDEN A Good Stock To Buy?
Is GDEN A Good Stock To Buy?

Among these funds, Hill Path Capital held the most valuable stake in Golden Entertainment Inc (NASDAQ:GDEN), which was worth $33.1 million at the end of the fourth quarter. On the second spot was Indaba Capital Management which amassed $29.8 million worth of shares. Nantahala Capital Management, Driehaus Capital, and Renaissance Technologies 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 1060 Capital Management allocated the biggest weight to Golden Entertainment Inc (NASDAQ:GDEN), around 4.68% of its 13F portfolio. Indaba Capital Management is also relatively very bullish on the stock, setting aside 3.75 percent of its 13F equity portfolio to GDEN.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. 1060 Capital Management, managed by Brian Gustavson and Andrew Haley, created the biggest position in Golden Entertainment Inc (NASDAQ:GDEN). 1060 Capital Management had $3.5 million invested in the company at the end of the quarter. Jack Ripsteen's Potrero Capital Research also made a $3 million investment in the stock during the quarter. The following funds were also among the new GDEN investors: Ira Unschuld's Brant Point Investment Management, Ira Unschuld's Brant Point Investment Management, and Dmitry Balyasny's Balyasny Asset Management.

Let's check out hedge fund activity in other stocks similar to Golden Entertainment Inc (NASDAQ:GDEN). These stocks are Gladstone Commercial Corporation (NASDAQ:GOOD), TrustCo Bank Corp NY (NASDAQ:TRST), Ducommun Incorporated (NYSE:DCO), SpartanNash Company (NASDAQ:SPTN), Universal Logistics Holdings, Inc. (NASDAQ:ULH), Ignyta Inc (NASDAQ:RXDX), and Molecular Templates, Inc. (NASDAQ:MTEM). This group of stocks' market values match GDEN's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GOOD,7,49377,-2 TRST,15,31323,2 DCO,8,68823,-4 SPTN,11,42421,-2 ULH,12,29540,3 RXDX,24,204458,24 MTEM,20,129514,0 Average,13.9,79351,3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.9 hedge funds with bullish positions and the average amount invested in these stocks was $79 million. That figure was $142 million in GDEN's case. Ignyta Inc (NASDAQ:RXDX) is the most popular stock in this table. On the other hand Gladstone Commercial Corporation (NASDAQ:GOOD) is the least popular one with only 7 bullish hedge fund positions. Golden Entertainment Inc (NASDAQ:GDEN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GDEN is 72.4. 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. 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 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Hedge funds were also right about betting on GDEN as the stock returned 79.6% since the end of Q1 (through 7/23) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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