Casino Stock Higher on Reports of Hedge Fund's Push for Sale

HG Vora Capital has allegedly built a stake in CZR

Managing Editor
Sep 13, 2018 at 9:57 AM
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Shares of casino stock Caesars Entertainment Corporation (NASDAQ:CZR) were volatile in pre-market action, and are higher in early trading, amid reports that an activist hedge fund could be pushing for a sale. Specifically, the New York Post said HG Vora Capital has been building a stake in Caesars, and is pushing for the divestiture of assets or a sale of the company. At last check, CZR stock is up 1.5% at $10.50.

Caesars stock has shed 18% in 2018, and on Aug. 1 suffered a massive post-earnings plunge. Since touching an annual low of $8.55 that day, the stock has recovered roughly 23%, but its gains have been capped by the 50-day moving average. 

Despite the stock's technical underperformance, analyst sentiment on the casino name is mostly optimistic. Of the seven brokerage firms in coverage, six sport a "strong buy" rating on CZR, while its average 12-month price target of $13.78 stands at a 33% premium to current levels.

On the other hand, short interest soared 22.3% during the past two reporting periods, and now represents a whopping 66.4% of the stock's total available float. At CZR's average daily trading volume, it would take shorts just about four days to buy back their bearish bets.

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