Stanley Druckenmiller Pares Penn National Gaming Stake

Posted on: February 17, 2021, 11:06h. 

Last updated on: February 17, 2021, 02:56h.

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

Hedge fund manager Stanley Druckenmiller’s Duquesne Family Office reconfigured its equity portfolio in the fourth quarter, including reducing its position in Penn National Gaming (NASDAQ:PENN).

Penn National
Hedge fund manager Stanley Druckenmiller, seen here. His Duquesne Family Office sold some of its Penn National Gaming shares. (Image: CNBC)

According to a Tuesday 13F filing with the Securities and Exchange Commission (SEC), the regional gaming stock was one of five the money manager pared exposure to in the October through December period. Duquesne Family Office trimmed its Penn stake by 20 percent, but still held 1.51 million shares of the name, worth $131 million as of Dec. 31, 2020, according to the regulatory document.

Druckenmiller, a native of Pennsylvania — Penn’s home market — has long had a position in the name, and his family office upped its stake in the casino operator to 1.89 million shares in the third quarter, while also eliminating investment in rival DraftKings (NASDAQ:DKNG).

The 13F filings don’t indicate on what date a professional investor bought or sold shares of a particular company or what prices were paid or received in those transactions. Assuming Duquesne waited until later in the fourth quarter to sell some of its Penn shares, it made an impressive gain.

From the stock’s early November trough around $53, it later flirted with $100 in December before settling around $80 to close out 2020. Penn, which has been one of the hottest gaming stocks since the March 2020 coronavirus market bottom, resides around $115 today.

Not a Strike Against Penn

Professional money managers, particularly those on a scale comparable to Duquesne Family Office, often quickly move in and out of some of their equity positions.

That means it’s not necessarily negative that Druckenmiller trimmed his Penn stake. Likewise, his family office eliminated a position in Las Vegas Sands (NYSE:LVS) during the fourth quarter, leaving Penn as the only gaming name on the firm’s roster of equity holdings.

It’s just a coincidence, but the timing of the Duquesne regulatory document revealing the lowered Penn National position isn’t a plus for the money manager. Earlier today, the state of Michigan said online sportsbook operators generated a combined handle of $115.2 million in the first 10 days of business.

More than $27.5 of that figure is attributable to Penn’s Barstool Sportsbook, putting the company third behind rivals FanDuel and DraftKings. That’s impressive, because Barstool’s marketing spending is essentially non-existent at this point, while competitors are willing to bleed cash in the name of customer acquisition.

Other Hedge Fund Moves in Gaming Stocks

Duquesne Family Office isn’t the only big-name asset allocator tinkering with positions in gaming equities.

Soros Fund Management, the family office of billionaire financier George Soros, departed its entire DraftKings stake in the fourth quarter. The same is true of Dan Loeb’s Third Point Capital and Caesars Entertainment (NASDAQ:CZR). Jonathan Litt’s Land & Buildings Investment Management, LLC (L&B) scaled back its Caesars position in the last three months of 2020.

A 13F from Andreas Halvorsen’s Viking Global confirms that the hedge fund reduced its Las Vegas Sands investment in the December quarter.