"Market volatility has picked up again over the past few weeks. Headlines highlight risks regarding interest rates, the Fed, China, house prices, auto sales, trade wars, and more. Uncertainty abounds. But doesn’t it always? I have no view on whether the recent volatility will continue for a while, or whether the market will be back at all-time highs before we know it. I remain focused on preserving and growing our capital, and continue to believe that the best way to do so is via a value-driven, concentrated, patient approach. I shun consensus holdings, rich valuations, and market fads, in favor of solid, yet frequently off-the-beaten-path, businesses run by excellent, aligned management teams, purchased at deep discounts to intrinsic value," are the words of Maran Capital's Dan Roller . His stock picks have been beating the S&P 500 Index handily. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Gaming and Leisure Properties Inc (NASDAQ: GLPI ) and see how it was affected.
Is Gaming and Leisure Properties Inc (NASDAQ: GLPI ) a buy, sell, or hold? Prominent investors are getting less bullish. The number of long hedge fund positions were trimmed by 6 in recent months. Our calculations also showed that GLPI isn't among the 30 most popular stocks among hedge funds . GLPI was in 27 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 33 hedge funds in our database with GLPI holdings at the end of the previous quarter.
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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 ( see the details here ). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We're going to take a gander at the new hedge fund action surrounding Gaming and Leisure Properties Inc (NASDAQ: GLPI ).
What does the smart money think about Gaming and Leisure Properties Inc (NASDAQ:GLPI)?
At the end of the fourth quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GLPI over the last 14 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Gaming and Leisure Properties Inc (NASDAQ:GLPI), with a stake worth $306.7 million reported as of the end of September. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $119.9 million. Gates Capital Management, Millennium Management, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Since Gaming and Leisure Properties Inc (NASDAQ:GLPI) has experienced a decline in interest from the smart money, logic holds that there is a sect of money managers that slashed their positions entirely by the end of the third quarter. Interestingly, Parag Vora's HG Vora Capital Management said goodbye to the biggest position of the "upper crust" of funds tracked by Insider Monkey, comprising close to $96.9 million in stock. Alexander Mitchell's fund, Scopus Asset Management , also dropped its stock, about $30.2 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 6 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks similar to Gaming and Leisure Properties Inc (NASDAQ:GLPI). We will take a look at Nordson Corporation (NASDAQ: NDSN ), Steel Dynamics, Inc. (NASDAQ: STLD ), Invesco Ltd. (NYSE: IVZ ), and Lamar Advertising Co (NASDAQ: LAMR ). This group of stocks' market valuations resemble GLPI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NDSN,19,76198,3 STLD,30,542904,2 IVZ,24,284167,-3 LAMR,22,252142,3 Average,23.75,288853,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $289 million. That figure was $955 million in GLPI's case. Steel Dynamics, Inc. (NASDAQ: STLD ) is the most popular stock in this table. On the other hand Nordson Corporation (NASDAQ: NDSN ) is the least popular one with only 19 bullish hedge fund positions. Gaming and Leisure Properties Inc (NASDAQ:GLPI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Hedge funds were also right about betting on GLPI as the stock returned 23.2% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey .