Here's Why Churchill Downs Incorporated (CHDN) Traded Down in Q2

The London Company, an investment management company, released “The London Company Mid Cap Strategy” second quarter 2025 investor letter. A copy of the letter can be downloaded here. US equities saw a double-digit surge in the second quarter following a sharp decline in the first quarter. The mid-cap composite rose 5.7% (5.5% net) in the second quarter, falling short of the Russell Midcap Index’s 8.5% increase. Please review the fund's top 5 holdings to gain insight into their key selections for 2025.

In its second quarter 2025 investor letter, The London Company Mid Cap Strategy highlighted stocks such as Churchill Downs Incorporated (NASDAQ:CHDN). Churchill Downs Incorporated (NASDAQ:CHDN) is a US-based racing, online wagering, and gaming entertainment company. The one-month return of Churchill Downs Incorporated (NASDAQ:CHDN) was 5.38%, and its shares lost 22.96% of their value over the last 52 weeks.  On July 29, 2025, Churchill Downs Incorporated (NASDAQ:CHDN) stock closed at $110.60 per share, with a market capitalization of $7.756 billion.

The London Company Mid Cap Strategy stated the following regarding Churchill Downs Incorporated (NASDAQ:CHDN) in its second quarter 2025 investor letter:

"Churchill Downs Incorporated (NASDAQ:CHDN) – CHDN has underperformed due to weakness in regional gaming, concern about consumer spending, and lower Derby profitability y/y. We note that the Derby was facing the 150th anniversary last year, and we continue to like CHDN, its highly cash-generative assets, track record of good capital allocation, and opportunities to reinvest in the business at attractive returns.

Increased: Churchill Downs Incorporated (CHDN) - Added to the existing position reflecting confidence in the long term growth story, recent insider purchases, and an attractive valuation (less than 12x EBITDA)."

Churchill Downs Incorporated (NASDAQ:CHDN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held Churchill Downs Incorporated (NASDAQ:CHDN) at the end of the first quarter, which was 41 in the previous quarter. In the second quarter of 2025, Churchill Downs Incorporated (NASDAQ:CHDN) delivered all-time record net revenue of $934 million and all-time record adjusted EBITDA of $451 million. While we acknowledge the potential of Churchill Downs Incorporated (NASDAQ:CHDN) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Churchill Downs Incorporated (NASDAQ:CHDN) and shared the list of stocks expected to beat the market by 20 percentage points this year. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.