For much of the third quarter, shares of Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) traded sideways; however, that proved to be a great time in which to buy the stock. Data shows some professional investors did exactly that.
Since the start of the current quarter, GLP, the owner of 43 casinos in 17 states is up 8.59 percent, putting the stock 300 basis points ahead of the S&P 500 for that period. Also, it confirms that pros who several months ago stepped into the real estate investment trust (REIT) made wise bets.
According to hedge fund data provider Insider Monkey, “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.”
Since the end of last year, hedge fund interest in the REIT which owns the Tropicana in Atlantic City, N.J. and five casinos in Louisiana was flat, before the uptick in the July through September period.
As reported by Casino.org, at the end of September, Renaissance Technologies held the largest position among hedge funds owners of Gaming and Leisure equity, an investment valued at almost $282 million.
Lured By Income
At a period when the dividend yield on the S&P 500 is only 1.81 percent and 10-year Treasuries are hardly higher at 1.84 percent, investors’ affinity for REITs is noticeable. GLP yields 6.38 percent, or nearly 400 basis points higher than the Dow Jones U.S. Real Estate Index.
The Pennsylvania-based company announced a small dividend increase last month, its sixth since being spun out from Penn National Gaming (NASDAQ: PENN) in 2013. GLP’s largest tenant is that gaming company.
Gaming equities, operators, and REITs are beloveds of the hedge fund community. However, some of those vehicles hold stocks for the long-term, whereas others have shorter investment scopes.
Insider Monkey notes, “On the second spot was Gates Capital Management, which amassed $117.9 million worth of shares. 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.”
Healthy earnings estimates could be an indication that third-quarter buyers of GLP shares may like 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.
Ahead Of The Competition
In the September quarter, the increase in hedge fund ownership of Gaming and Leisure is noteworthy for another reason: it was accrued as some of those funds departed Vici Properties Inc. (NYSE:VICI). Actually, hedge fund interest in the REIT which owns Caesars Palace jumped by 37 percent in the previous quarter.
Vici is the best-performing gaming REIT year-to-date, with a gain of 32.80 percent, topping GLP by around one percent. Both stocks have more than doubled the yields offered by competing MGM Growth Properties (NYSE:MGP), which is up only 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.