Somewhat quietly, shares of Full House Resorts, Inc. (NASDAQ:FLL) are in rally mode, and the catalyst appears to be news that an asset manager took a 7.3 percent stake in the regional gaming company.
Entering Thursday, Las Vegas-based Full House was up 5.52 percent over the past week, and the stock is up two percent today at this writing. A Form 13G filing made with the Securities and Exchange Commission (SEC) and obtained by Casino.org confirms that Kennedy Capital Management, Inc. recently acquired 1.97 million shares of the gaming company, good for a 7.3 percent stake.
Schedule 13G is used to report a party’s ownership of stock which exceeds 5% of a company’s total stock issue,” according to Investopedia. “The ownership of over 5% of a publicly-traded stock is significant ownership, and reporting to the public is a requirement.”
Full House operates five gaming properties – the Grand Lodge and Stockman’s casinos in Nevada, the Rising Star Casino Resort in Rising Sun, Ind., Bronco Billy’s in Cripple Creek, Colo., and the Silver Slipper in Bay St. Louis, Miss.
Could be a Long-Term Investor
Gaming equities are favored destinations for a slew of activist investors and hedge funds, many of which remain engaged with the stocks for just a few quarters. Kennedy Capital, however, appears to be neither. The St. Louis-based firm, which had $4.23 billion in assets under management at the end of last year, doesn’t have a history of activism.
“The cornerstone of our investment approach is a highly analytical, repeatable process based on a rigorous, bottom-up fundamental search for stock ideas developed by our founders more than three decades ago,” according to the company.
Kennedy Capital specializes in unearthing equity opportunities in the micro, mid, and small-cap universes. With a market capitalization of just over $91 million at this writing, Full House qualifies as a micro-cap stock.
The investment manager runs a dozen strategies across the core, growth and value styles. Kennedy’s 13G filing doesn’t say how the firm is allocating its Full House stake. But its micro-cap portfolio would be a logical destination. That investment grouping looks to beat the Russell Microcap Index, something the firm has done over the past three, five, and 10 years.
At the end of 2019, Twin River Worldwide Holdings (NYSE:TRWW), another gaming stock, was a top 10 holding in Kennedy’s micro-cap portfolio.
Other Investors Like it, Too
Some other institutional investors have warmed to Full House in recent months. Last November, the stock jumped as much as 22 percent in a single day after Gabelli Asset Management Company Investors (GAMCO) founder Mario Gabelli highlighted the name in a CNBC interview.
One trait many micro-cap stocks have in common is lack of analyst coverage. For example, just two analysts follow Full House compared to 21 covering Las Vegas Sands (NYSE:LVS), the largest US gaming firm.
However, the analysts with Full House in their universe are bullish on the name, with an average price target of $4.25, implying upside of 21.4 percent from where the stock resides at this writing.