Hedge funds are beginning to turn away from Las Vegas Sands, the largest casino operator in the US by market value. The number of the funds that maintain Sands in their portfolios has dropped substantially, dropping 16% from the last quarter of 2018 through the end of the first quarter of this year. It’s the largest decline registered in two years.
According to Casino.org, by the end of April, 37 hedge funds still held onto their Sands’ shares. However, 14 dropped the company and another 12 reduced their positions by 20% or more. Citadel Investment Group, owned by Ken Griffin, reduced its holdings by 40% and Millennium Management pulled back by 42%. Other hedge funds, such as Gotham Asset Management and Point72 Asset Management, also lowered their stakes.
Shares of all casino operators fell through the end of last year and reducing the holdings could have been beneficial to the hedge funds. Despite losing around 20% last year, closing at $47.39 at year’s end, Sands saw an increase across the first four months of this year, meaning the hedge funds could have picked up a nice return. Since May, Sands has seen a drop of about 10.4%, so an April departure would have been well-timed.
Sands is just one of the casino companies to lose favor with hedge funds. Caesars has also lost some of its momentum, with Soros Fund Management, LLC, among others, reducing its stake across the first quarter of the year by 25%. It had previously controlled 5% of the company.
Changes in the gambling landscape could be the catalyst for the hedge funds’ actions. The ongoing US-China trade war has made some analysts and investors skittish due, in part, to a reduction it has caused in performance in Macau. However, the drop in hedge fund interest doesn’t necessarily reflect that they are turning against the casino industry as a whole. Corvex Management, run by MGM Resorts International director Keith Meister, just picked up another 2.97 million shares at a cost of $75.2 million. The hedge fund increased its stake about a month after another director, Paul Salem, purchased 800,000 shares for about $20.3 million.