Even though many hedge funds had an awful 2018, they are still very popular with high net worth and institutional investors. One reason they remain popular is that many hedge funds are very nimble and can move in and out of positions quickly if needed. Plus, they tend to chart their own paths instead of following Wall Street trends, which can be a plus with the right fund manager.
A new Jefferies report looks at the positioning for high and low turnover hedge funds. We remain far more interested in the low turnover funds, as they tend to be more conservative and less reactionary. This is the second time this year that Jefferies team has covered hedge fund turnover, and once again the lower turnover funds tend to do better.
The Jefferies report noted this:
Looking at the performance and making the assumption that nothing changed between 12/31 and 3/31, we found that the Low Turnover managers posted better results, at 19.7% versus the High Turnover at 15.9%. The good news is that both beat the S&P 500. The Low Turnover portfolio was aided by a big overweight to Health Care, which had a good first quarter. However quarter to date, performance has weakened.
Jefferies offered a list of the top buys that the low turnover hedge funds made, all of which had a very positive first quarter. We screened the top five buys against our 24/7 Wall St. research database to find firms that had Buy ratings.
This well-known old-school gaming company is offering solid upside. Caesars Entertainment Corp. (NASDAQ: CZR) provides casino-entertainment and hospitality services, and its resorts operate primarily under the Harrah’s, Caesars and Horseshoe brand names.
Caesars facilities include gaming offerings, food and beverage outlets, hotel and convention space, and non-gaming entertainment options. Caesars Entertainment is one of the largest gaming companies in the world and currently owns or operates 49 casino properties in 13 states and in four other countries.
Activist investor Carl Icahn is said to be building a massive position in the company, which could be very positive for Caesars investors.
The SunTrust price target for the shares is $11, and the Wall Street consensus target was last seen at $11.11. The stock closed Tuesday’s trading at $8.93 a share.
The huge social media leader had an absolutely wretched 2018 but has rallied back smartly. Facebook Inc. (NASDAQ: FB) is the largest social network with over 2.0 billion monthly active users and over 1.4 billion daily active users. The company generates revenue from advertising and from payments, with over 95% of revenue from advertising. It generates close to 50% of revenues in the United States and Canada and is expanding rapidly in international markets.
The company’s solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends. Messenger, a messaging application for mobile and web on various platforms and devices, enables people to reach others instantly, as well as enable businesses to engage with customers. WhatsApp Messenger is a mobile messaging application.
Jefferies has a price target of $230, and the posted consensus target is $221.50. The shares closed trading most recently at $184.31 apiece.