In recent months, a number of entertainment and beverage companies — offering products and services that range from soda to gambling — have become increasingly popular investment choices.
Eight analysts, for instance, have given Keurig Dr Pepper Inc a buy rating — including the Royal Bank of Canada, which increased its price target on shares of the company from $41 to $42 and gave it an outperform rating in late October. Citigroup also gave Keurig Dr Pepper’s stock a buy rating in a report issued the same month, according to MarketBeat.
Earning results that Keurig Dr Pepper — which manufactures and distributes beverages, branded concentrates, syrups and single-serve brewing systems globally — posted on Oct. 24 showed $0.51 earnings per share for the quarter; the company’s quarterly revenue totaled $3.89 billion, higher than had been projected, and showed a 2.3% rise year-over-year.
A number of hedge funds have increased their ownership of Keurig Dr Pepper’s stock in recent months. Global value-oriented and event-driven fund Armistice Capital, for instance, raised its stake in Keurig Dr Pepper by more than 186% in the second quarter of 2024. Armistice Capital purchased 966,924 shares of the company’s stock, bringing its ownership up to 1,486,063 shares, with a value that MarketBeat said was approximately $49,635,000.
Dimensional Fund Advisors LP also added shares of Keurig Dr Pepper in the second quarter, buying 1,878,597 for a total of 6,373,362 shares of the beverage company’s stock — a 41.8% increase from its previous holdings, worth an estimated $212,901,000.
The Public Sector Pension Investment Board increased its position in Keurig Dr Pepper during the quarter by more than 5,018% with the purchase of an additional 822,664 shares of the company’s stock and now holds 839,057 shares.
In the third quarter of this year, King Luther Capital Management Corp. upped its ownership of Keurig Dr Pepper with the purchase of 767,298 more shares. The firm currently has 1,378,853 shares of the company’s stock — a more than 125% increase from the amount it previously had.
Another Area of Focus
Several institutional investors have also upped their stake in entertainment-oriented companies like PENN Entertainment this year.
The $3 billion business, which operates sports content, gambling and other entities, has diversified its holdings, according to Fintel, adding video gaming terminals and a sports betting platform. PENN currently has 43 properties in 20 states; its brands include Hollywood Casino, Ameristar, and Boomtown.
Research firms that have weighed in on PENN’s stock in recent months include Wells Fargo & Company, which raised its target price for the stock from $18 to $20 in an October research note; and Macquarie, which in November bumped its target price for PENN’s stock from $26 to $27 and paired the increase with an outperform rating, according to a Nov. 24 MarketBeat article.
Several investors have grown their stake in PENN Entertainment in recent quarters. Vanguard Group Inc. raised its investment in the company by 0.4% in the first quarter, increasing its ownership to 14,789,817 shares with the purchase of an additional 59,897 shares. In the second quarter, Earnest Partners LLC grew its ownership by 179,813, amassing 4,117,946 shares of the company’s stock, a more than 4% increase.
After adding 540,630 shares, DME Capital Management LP upped its stake by 11.9%, for a total ownership of 5,095,340 shares of the company’s stock.
Fintel reported that Armistice Capital had increased its shares of PENN by more than 91%, reaching an ownership of 2,643,060 shares of the company — one of the hedge fund’s largest portfolio allocation increases in the last quarter. As of June 30, Armistice Capital’s shares were valued at $51,156,426.
Armistice Capital has also invested in Melco Resorts & Entertainment Limited, which owns and operates resort facilities in Asia and Europe, this year.
According to Fintel, on Nov. 14, Armistice Capital filed a 13F-HR form that disclosed ownership of 400,000 shares of the Hong Kong-based company’s stock, with a value of $3,116,000 as of September 30, 2024. The hedge fund’s previous Aug. 14 13F-HR indicated, at that time, it did not own shares of Melco Resorts & Entertainment Limited.
Several other institutional investors and hedge funds acquired a new stake in the entertainment and lodging company in the second quarter.
Ridgewood Investments LLC, for example, gained an ownership that’s valued at $42,000 during the quarter, according to MarketBeat; Russell Investments Group Ltd. also obtained a new position in the company, worth approximately $56,000. The new stake that Headlands Technologies LLC acquired in Melco Resorts & Entertainment during the second quarter reportedly had a value of about $56,000.
As of November 4, more than 39% of Melco Resorts & Entertainment Limited’s stock was owned by institutional investors and hedge funds, according to MarketBeat.
In mid-November, Insider Monkey selected Melco Resorts & Entertainment Limited as one of the 10 most undervalued hotel stocks, citing the company’s robust financial performance, recent additions such as its revised loyalty program and new gaming areas within resorts, and other growth-oriented plans — which include adding gaming table RFID technology, relaunching entertainment shows and other endeavors.
