Some sectors are controversial when it comes to investing. Casino and gambling stocks in particular can trigger a debate in some crowds. For example, Warren Buffett has repeatedly said he’s against gambling, so it’s hard to imaging him investing in gambling stocks.
Q3 2020 hedge fund letters, conferences and more
However, many hedge funds do invest in gambling stocks. With the pandemic going on, some are also betting against them. Here are some of the gambling stocks that hedge funds are rolling the dice on.
Gambling shorts
This hasn’t been a good year to wager against sports betting companies despite the shutdown of most sports. However, if some hedge fund shorts that were open early this year remained open throughout the pandemic, they may have felt some pain.
For example, Ken Griffin’s Citadel Advisors was betting against British bookmaker GVC Holdings, Casino.org reported earlier this year. HedgeWeek also reported that AQR Capital Management and Schoenfeld Asset Management were also betting against GVC.
The stock plunged during the March selloff but has since rebounded back to where it was. If the hedge funds that were betting against it didn’t cover during the March selloff, they’re probably feeling some pain right about now.
Kuvari Partners was also betting against William Hill, which entered a deal to be acquired by Caesars Entertainment. It’s unclear if this position is still in place or whether the fund covered after the deal was announced in late September.
Gambling longs
Interestingly, Citadel isn’t betting against all gambling stocks. The hedge fund also was long Caesars Entertainment, Las Vegas Sands and Meico Resorts earlier this year, among other stocks in the industry.
DG Value had several gambling-related long positions as recently as the third quarter. In his third-quarter letter to investors, Dov Gertzulin said the fund benefited from its long positions in Caesars Entertainment, Everi Holdings and Eldorado Resorts, which was acquired by Caesars.
He actually added to DG Value’s Caesars investment after the Eldorado merger went through. He argues that regional casinos are “local entertainment fixtures,” adding that most have thrived since reopening in May. Everi Holdings is also a gambling play, but it’s a little different since it supplies gaming and financial technology products to casino operators.
Of note, Eldorado Resorts was a hedge fund favorite during the first quarter, and many funds stuck with it through the first quarter of the year. Wynn Resorts was also a hot hedge fund stock earlier this year, although many funds dumped it during the March selloff when casinos where shuttered. According to Insider Monkey, Melvin Capital, Citadel, Columbus Hill and Alden Global Capital were all long on Wynn Resorts.
