A Thursday to Forget for These Hedge Funds

Ray DalioWe have identified five stocks that had absolutely horrible days on Thursday. Assuming the funds we track have not changed their holdings since the end of June, there were key funds that lost big money on these price drops. The first company on our list is The New York Times Company (NYSE:NYT). The company was down almost 22% on Thursday—around $2.30—on news of an 85% drop in earnings from the same period last year. The company missed 3Q estimates of $0.08, posing EPS of $0.02. The big drag on the company was advertising revenue, which was down 8.9% from 3Q last year. The New York Times will continue to face headwinds related to the shift from printed content to digital content.

The top fund owner, Kahn Brothers, owned nearly 4.6 million shares. Assuming the firm has not changed its position since the end of June, Kahn lost over $10.5 million dollars on Thursday. Other notable investors, Ken Griffin and Chuck Royce, also had large positions. These funds owned 2.9 million and 1.1 million shares, respectively, causing Griffin to lose around $6.7 million and Royce $2.5 million.

Cabelas Inc (NYSE:CAB) is another company losing big money, with its market value down over 16% on Thursday, or $9 per share. The company reported 3Q earnings up 28% from last year but the numbers missed consensus estimates and the stock was forced lower. The company offered full year guidance in the range of $2.63 and $2.68, compared to previous analyst expectations of $2.70. The company’s 3Q EPS came in at $0.61, compared to consensus of $0.60, which comes on the back of having beaten consensus estimates by at least 20% for the last two quarters.

While Jim Simons and Israel Englander were very modest shareholders, Ken Fisher (who is not technically a hedge fund manager) was by far the top fund owner, with 2.7 million shares at the end of 2Q. On the single day Cabelas decline, Fisher may have lost around $24 million.

Cliff Natural Resources Inc (NYSE:CLF) was down 10%, almost $4.50, after posting per share operating profit of $0.61, well below consensus of $1.02. As well, sales were down 30% from the same quarter last year. The slumping price of iron ore is placing downward pressure on the company, with ore prices for 3Q down 36% from the same quarter last year, as well as slow global growth—Cliff is one of our stocks that are relying heavily on a global recovery.

Steven Cohen, D.E. Shaw and Ray Dalio all upped their stakes over 100% during 2Q, and Carlson Capital and Fisher Asset Management were the top two fund owners. Carlson increased his 1Q stake over 8000% and owned 1 million shares, and Fisher owned 840,000. Carlson may have lost over $4.5 million; a tough break considering the firm’s massive bet.

Best Buy Co., Inc. (NYSE:BBY) saw its market value decline around down 10%, or around $1.75, as their plans to increase competition with Amazon were overshadowed by poor earnings. Best Buy announced that last quarter’s earnings would be well below the prior period. The company now expects same store sales to be in the range of a decline of 3.2% to a decline of 5.3%. Previous EPS estimates showed last quarter earnings coming in at $0.36, and since Best Buy’s news, the consensus is now $0.17—see if Best Buy is still a good investment.

There were six funds owning at least 1 million shares at the end of 2Q, meaning they all may have lost at least $1.75 million. This includes Greenlight Capital, Bridgewater Associates and SAC Capital. The top owner was Ken Griffin with 2.7 million shares, and the next largest owner was AQR Capital; Griffin may have lost at least $4.8 million.

Logitech International SA (NASDAQ:LOGI) down 18.50%, around $1.60, saw a 7% decline in sales last quarter compared to the same quarter a year ago. Yet, the company managed to post EPS of $0.35, a 25 cent increase year over year. Logitech was down after offering guidance that indicated income would be lower in the second half of the year when compared to last year. The company cited continued uncertainty in the PC market, and consensus now shows that full year EPS is expected to be down 17% YOY.

This decline was very unfortunate for the top fund owners in Logitech, not just because the stock was down 18.50%, but because the funds all took either new positions or made large share purchases during 2Q. Odey Asset Management took an entirely new position that was 1.5 million shares, and Chuck Royce and Coatue Management upped their stakes to over 1 million shares each. Coatue may have lost as much as $2.4 million on Thursday, making it truly a day to forget.

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