Hedge Funds Bet Big on Caesars Takeover

June 20, 2019 | Hedge Funds
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The Caesars Entertainment stock is seeing heightened interest from hedge funds. Is a deal coming?

Is a Caesars takeover imminent?

Based on recent bets by hedge funds, the markets anticipate a deal very soon.

This week, Deutsche Bank analyst Carlo Santarelli said he expects Eldorado Resorts may purchase Caesars Entertainment. He also said the odds of the transaction coming to fruition were increasing.

A Caesars takeover favorable for both parties

In a report, Santarelli predicted a deal was imminent. The analyst cited valuations and synergy in their strategies.

“We believe the likelihood for an ERI/CZR pairing has increased and we believe this transaction would be a net positive for ERI, CZR, and the gaming group more broadly, given the valuation implications and broader halo of a busy (mergers and acquisitions) environment,” Carlo Santarelli said in a recent report.

Further analysis by investment bankers Jefferies revealed that hedge funds holding stakes in Caesars were the ‘long haul’ type. This strategy is in contrast to the high turnover kind that typically holds a stock for the short term.

This is an important distinction. According to industry analysis, hedge funds with a longer investing horizon generally outperform their peers who weave in and out of stocks.

Caesars holders are the creme-de-la-creme of the hedge fund industry. The roster of shareholders includes names like Icahn Capital, Soros Fund Management, and David Tepper’s Appaloosa Management.

Howard Marks’ Oaktree Capital Management is also a shareholder.

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