David Tepper Adds Caesars, Drops Sands, Wynn from Appaloosa Portfolio

Posted on: August 16, 2022, 02:32h. 

Last updated on: August 18, 2022, 01:28h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

David Tepper’s Appaloosa Management reconfigured its exposure to casino stocks in the second quarter, adding a new position in Caesars Entertainment (NASDAQ:CZR) while eliminating stakes in Las Vegas Sands (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN).

David Tepper
Carolina Panthers owner David Tepper at a game in 2019. His hedge fund bought Caesars stock in the second quarter. (Image: Mike McCarn/AP)

Sands and Wynn, which control a combined seven Macau integrated resorts, had brief stays in the hedge fund’s portfolio. In the March quarter, the hedge fund bought 525,000 shares of Las Vegas Sands and 225,000 shares of Wynn Resorts, according to a 13F filing with the Securities and Exchange Commission (SEC). At the time, those were the only casino stocks held by the money manager.

Appaloosa’s latest 13F reveals Sands and Wynn are gone, while the hedge fund, as of the end of the second quarter, holds 150,000 shares of Caesars. The Harrah’s operator is one of several new positions initiated by Appaloosa last quarter and is currently the investment vehicle’s only gaming holding.

Tepper’s hedge fund previously owned Caesars stock in mid-2019, leading up to that company receiving an acquisition offer from Eldorado Resorts. The billionaire financier is also the owner of the NFL’s Carolina Panthers.

Caesars Popular with Professional Investors

Hedge funds frequently trade in and out of casino stocks, and Caesars has long been a favorite among this group of professional investors.

That was on display again during the April through June period. Among the well-known investors that liquidated stakes in the Horseshoe operator were Soros Fund Management, the family office of billionaire financier George Soros, and Sandell Asset Management.

However, Tepper’s Appaloosa and Jonathan Litt’s Land & Buildings Investment Management were among the hedge funds adding shares of Caesars in the second quarter. Land & Buildings bought 182,500 shares of the casino name.

Assuming those money managers are still holding shares of the Flamingo operator, they’re being rewarded. That’s because the stock has been higher by 36.55% over the past month, and even with that run, some analysts view the stock as undervalued.

In addition to active debt-trimming efforts, Caesars is paring losses in its digital business, which includes Caesars Sportsbook. That unit was nearly profitable in July, and its second-quarter loss of $69 million was 50% better than Wall Street forecast.

Other Pros’ Moves with Casino Stocks

David Einhorn’s hedge fund, Greenlight Capital, eliminated its position in social casino developer Playstudios (NASDAQ:MYPS) in the June quarter.

PlayStudios operates in fast-growing segment analysts and investors are enthusiastic about. Additionally, its business model, including its loyalty program — playAwards — and partnership with MGM Resorts, is viable. Its clientele is also devoted, with 4.2 million monthly average users playing close to an hour per day.

Should the current rebound in consumer discretionary names, including casino stocks, prove durable, more professional investors may warm to these assets into year-end.