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Bally’s and MGM Resorts: Hedge Funds Adjust Positions

Bally's and MGM Resorts Hedge Funds Adjust Positions
by
August 15, 2023
in Finance News, iGaming News
186

The dynamic world of the gambling industry is subject to constant change, and in the second quarter, some notable hedge funds made adjustments to their holdings. Bally’s (NYSE: BALY) and MGM Resorts International (NYSE: MGM) are among the players in the casino sector where hedge funds have reduced their positions. Let’s delve into the strategic moves that have taken place.

Bally’s Confronting Challenges

Bally’s, a regional casino operator based in Rhode Island, has traditionally been a favored choice among hedge funds. However, the company witnessed a decline of 22.2% in the June quarter. During this time, the hedge fund named after John Paulson exited its position in the stock.

Paulson & Co., an influential money manager, initially acquired Bally’s shares in the second quarter of 2021. However, a recent Form 13F filed with the Securities and Exchange Commission (SEC) indicates that the hedge fund liquidated its remaining stake in the company over the course of this year. While the exact timing of the sale isn’t known, this move has caught the attention of the investment community.

MGM Resorts and Wynn Also in Focus

MGM Resorts International, the operator of the renowned Bellagio, also witnessed changes in its ownership structure. Corvex Management, led by Keith Meister, who is also a member of the MGM board, adjusted its stake in the casino giant during the same quarter. Additionally, the hedge fund divested its holdings in Endeavor Group Holdings, Inc. (NYSE: EDR), which has its own gaming exposure through the OpenBet sports wagering platform.

Wynn Resorts (NASDAQ: WYNN), another major player in the casino industry, experienced adjustments in its ownership structure as well. 3G Capital Partners, co-founded by Brazilian billionaire Alexandre Behring, reduced its stake in Wynn Resorts from 117,500 shares to 105,000 shares during the April to June period. This reduction was part of a broader reshaping of the hedge fund’s portfolio.

DraftKings Making Strides

The rapidly growing gambling provider DraftKings (NASDAQ: DKNG) garnered attention in the second quarter as it presented a profitable report as a publicly traded company. This attracted at least one hedge fund during the April to June period.

In a Form 13F published on Monday, Whale Rock Capital Management unveiled a new stake in the gambling company. The hedge fund acquired over 8.11 million shares of the company, amounting to $215.68 million, during the second quarter.

It’s worth noting that DraftKings is the only gambling holding in Whale Rock’s portfolio. In addition to DraftKings, the hedge fund owns a diverse range of technology stocks, including emerging growth companies.

Shaping the Industry Landscape

The gambling industry is characterized by ongoing transformation, influenced not only by market trends but also by the strategic moves of significant players, including hedge funds. Bally’s, MGM Resorts, Wynn Resorts, and DraftKings are just a few of the key players in this dynamic environment. As the gambling sector continues to evolve, it remains intriguing to observe the strategic shifts that will shape its trajectory.

Frequently Asked Questions (FAQs)

Why did Bally’s experience a decline in the June quarter?

Bally’s saw a 22.2% decline in the June quarter, primarily due to hedge fund adjustments, particularly by John Paulson’s eponymous fund, which exited its position in the company.

How did Corvex Management impact MGM Resorts?

Corvex Management, led by Keith Meister, a member of the MGM board, reduced its stake in MGM Resorts during the same quarter as part of portfolio adjustments.

What prompted 3G Capital Partners to alter its position in Wynn?

3G Capital Partners, co-founded by Alexandre Behring, reduced its stake in Wynn Resorts from 117,500 shares to 105,000 shares to optimize its portfolio.

Why did Whale Rock Capital Management invest in DraftKings?

DraftKings’ strong performance in the sports betting sector during the quarter drew the attention of Whale Rock Capital Management, prompting the hedge fund to establish a new stake in the company.

What distinguishes DraftKings in Whale Rock’s portfolio?

DraftKings is the sole gambling holding in Whale Rock’s portfolio, which primarily consists of technology stocks, including emerging growth companies—a trend reflecting the industry’s push for innovation.

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