This Fund Sold $39 Million of Boyd Gaming Stock While Exiting MGM and Downsizing United Parks Bets

HG Vora Capital Management fully exited its position in Boyd Gaming Corporation (BYD) during the third quarter, selling 500,000 shares for an estimated $39.1 million. This divestment, part of a broader reduction in leisure sector exposure that also included MGM, suggests the hedge fund perceives a narrowed upside for Boyd Gaming or more attractive capital redeployment opportunities elsewhere. The move aligns with Boyd's mixed Q3 results, which, despite revenue growth, showed flat adjusted earnings and declining adjusted EBITDAR and online/room revenues, indicating profitability stabilization challenges despite a one-time gain from the FanDuel sale.

Analysis

HG Vora Capital Management fully liquidated its 500,000-share position in Boyd Gaming (BYD) during Q3, valued at an estimated $39.1 million, representing 5.3% of its 13F reportable AUM. This divestment was part of a broader strategic reduction in leisure sector exposure, which also included trimming United Parks (PRKS) and exiting MGM Resorts (MGM) in the same quarter. The move indicates a potential shift in capital allocation priorities by the hedge fund.

Boyd Gaming's Q3 results presented a mixed financial picture, likely influencing HG Vora's decision. While headline revenue increased to $1 billion from $961 million year-over-year, adjusted EBITDAR declined to $321.8 million from $336.6 million, primarily due to lower market-access fees post-FanDuel transaction. Adjusted earnings remained flat at $139.1 million, and both online and room revenues experienced year-over-year declines, signaling challenges in profitability stabilization despite a one-time $1.4 billion GAAP net income boost from the FanDuel sale.

Boyd Gaming's stock, priced at $79.78, has gained 9% over the past year, underperforming the S&P 500's 14% return during the same period. HG Vora's exit, alongside its continued significant holdings in other leisure giants like Penn (PENN) and Caesars (CZR), suggests a belief that BYD's upside potential has narrowed or that capital can be more productively deployed elsewhere within the sector. This investor sentiment, coupled with the mixed Q3 operational metrics, implies a cautious outlook for BYD's near-term growth trajectory.

Key Decisions for Investors

• Investors should closely monitor Boyd Gaming's future earnings reports for signs of profitability stabilization and growth in online and room revenues, as these were key areas of weakness in Q3.
• Consider the implications of HG Vora's full exit and broader leisure sector reduction, which may signal a perceived narrowing of upside potential for BYD compared to other gaming investments.
• Evaluate BYD's performance relative to its peers and the broader market, noting its recent underperformance against the S&P 500, and assess if current valuations adequately reflect the mixed operational outlook.