Hedge Funds Are Crazy About Bally’s Corporation (BALY)

·6 min read

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Bally's Corporation (NYSE:BALY) makes for a good investment right now.

Bally's Corporation (NYSE:BALY) investors should be aware of an increase in hedge fund interest in recent months. Bally's Corporation (NYSE:BALY) was in 30 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BALY isn't among the 30 most popular stocks among hedge funds (click for Q2 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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Paul Reeder PAR Capital Management
Paul Reeder PAR Capital Management

Paul Reeder of PAR Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 check out the key hedge fund action encompassing Bally's Corporation (NYSE:BALY).

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

At the end of June, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 67% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in BALY a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Among these funds, PAR Capital Management held the most valuable stake in Bally's Corporation (NYSE:BALY), which was worth $123.3 million at the end of the second quarter. On the second spot was Long Pond Capital which amassed $115.8 million worth of shares. Paulson & Co, HG Vora Capital Management, and GLG Partners 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 Solus Alternative Asset Management allocated the biggest weight to Bally's Corporation (NYSE:BALY), around 5.25% of its 13F portfolio. Potrero Capital Research is also relatively very bullish on the stock, designating 4.39 percent of its 13F equity portfolio to BALY.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls' herd. Long Pond Capital, managed by John Khoury, assembled the largest position in Bally's Corporation (NYSE:BALY). Long Pond Capital had $115.8 million invested in the company at the end of the quarter. John Paulson's Paulson & Co also made a $54.1 million investment in the stock during the quarter. The other funds with brand new BALY positions are Parag Vora's HG Vora Capital Management, Ryan Caldwell's Chiron Investment Management, and Joseph Samuels's Islet Management.

Let's go over hedge fund activity in other stocks similar to Bally's Corporation (NYSE:BALY). We will take a look at Rush Enterprises, Inc. (NASDAQ:RUSHA), Afya Limited (NASDAQ:AFYA), Patria Investments Limited (NASDAQ:PAX), WesBanco, Inc. (NASDAQ:WSBC), Heska Corp (NASDAQ:HSKA), Edgewell Personal Care Company (NYSE:EPC), and Holly Energy Partners, L.P. (NYSE:HEP). This group of stocks' market caps are closest to BALY's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RUSHA,17,88825,0 AFYA,6,54935,1 PAX,15,160240,-4 WSBC,12,25390,-4 HSKA,20,339971,-8 EPC,20,203597,0 HEP,3,4435,1 Average,13.3,125342,-2 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $577 million in BALY's case. Heska Corp (NASDAQ:HSKA) is the most popular stock in this table. On the other hand Holly Energy Partners, L.P. (NYSE:HEP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Bally's Corporation (NYSE:BALY) is more popular among hedge funds. Our overall hedge fund sentiment score for BALY is 90. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Unfortunately BALY wasn't nearly as popular as these 5 stocks and hedge funds that were betting on BALY were disappointed as the stock returned -5.6% since the end of the second quarter (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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

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