Gaming and Leisure Properties Lures More Elite Professional Investors as Stock Rebounds

Posted on: December 8, 2019, 04:00h. 

Last updated on: December 8, 2019, 11:36h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Shares of Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) traded sideways for much of the third quarter, but that proved to be an excellent time in which to buy the stock. Data confirms some professional investors did just that.

GLP, the owner of 43 casinos in 17 states, is up 8.59 percent since the start of the current quarter, putting the stock 300 basis points ahead of the S&P 500 for that period. It also confirms that pros that stepped into the real estate investment trust (REIT) several months ago made wise bets.

At Q3’s end, a total of 31 of the hedge funds were bullish on this stock, a change of 15 percent from the second quarter of 2019,” according to hedge fund data provider Insider Monkey.

Hedge fund interest in the REIT that owns the Tropicana in Atlantic City, N.J. and five casinos in Louisiana was flat since the end of last year, prior to the uptick in the July through September period.

Among hedge funds owners of Gaming and Leisure equity, Renaissance Technologies held the largest position at the end of September, an investment valued at nearly $282 million.

Attracted By Income

At a time when the dividend yield on the S&P 500 is just 1.81 percent and 10-year Treasuries are barely higher at 1.84 percent, investors’ affinity for REITs is pronounced. GLP yields 6.38 percent, or almost 400 basis points higher than the Dow Jones U.S. Real Estate Index.

Last month, the Pennsylvania-based company announced a modest dividend increase, its sixth since being spun out from Penn National Gaming (NASDAQ: PENN) in 2013. That gaming company is GLP’s largest tenant.

Gaming equities, operators, and REITs are favorites of the hedge fund community. But some of those vehicles hold stocks for the long-term, while others have shorter investment horizons.

On the second spot was Gates Capital Management, which amassed $117.9 million worth of shares,” notes Insider Monkey. “Citadel Investment Group, Cardinal Capital, and Echo Street Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company.”

Robust earnings estimates could be a sign that third-quarter buyers of GLP shares may want to stick with the name into next year. Wall Street is expecting the REIT’s 2019 earnings per share to jump 8.2 percent to $3.44, and revenue to climb 9.2 percent to $1.15 billion.

Beating The Competition

The increase in hedge fund ownership of Gaming and Leisure in the September quarter is notable for another reason: it was accrued as some of those funds departed Vici Properties Inc. (NYSE:VICI). In fact, hedge fund interest in the REIT that owns Caesars Palace plunged by 37 percent in the prior quarter.

Year-to-date, Vici is the best-performing gaming REIT with a gain of 32.80 percent, besting GLP by about one percent. Both stocks have more than doubled the returns offered by rival MGM Growth Properties (NYSE:MGP), which is up just 13.59 percent this year.

Among the hedge funds that allocate the largest weights of their portfolios to GLP, Covalent Capital Partners takes the top spot at 12.57 percent. Covalent describes itself as an “event-driven value” investor.