After sharp declines on Friday and Tuesday, many traders remain on edge in anticipation of this month’s FOMC meeting coming September 20-21. If rates rise faster than the market expects, sentiment could turn negative. If rates remain accommodative, however, the market may have some further short-term upside left.
In this article, we’ll take a closer look at the news that has traders buzzing about Herbalife Ltd. (NYSE:HLF), Alibaba Group Holding Ltd (NYSE:BABA), JetBlue Airways Corporation (NASDAQ:JBLU), Ruby Tuesday, Inc. (NYSE:RT), and Radiant Logistics Inc (NYSEMKT:RLGT) today, and use the latest regulatory filing data to see how successful hedge funds are positioned in them.
At Insider Monkey, we track over 750 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).
Herbalife Ltd. (NYSE:HLF) is again in the spotlight after Carl Icahn of Icahn Capital LP said that the company should consider going private just to be free of Bill Ackman of Pershing Square, who is short the company. Moreover, Icahn has filed an application with the FTC for the right to buy up to half of Herbalife’s shares. Icahn currently owns around 20% of the float and has the right to own up to 35% of the company. As for who might help Herbalife go private, Icahn hasn’t ruled himself out yet. The famed corporate activist said “Would I do an offer? I would consider it. It’s something that I’ve thought about.” Herbalife shares are up by over 5% today and by 17.51% year-to-date.
In other short-related news, Alibaba Group Holding Ltd (NYSE:BABA)‘s executive vice chairman, Joseph Tsai, recently commented at the Delivering Alpha conference that short seller Jim Chanos has withstood a lot of pain shorting Alibaba’s stock (Alibaba shares are up by 23% year-to-date and are over 65% higher than its yearly low point). One reason Jim Chanos‘ Kynikos Associates might be short is that the fund feels that Alibaba hasn’t disclosed all of its financials. Tsai responded to Chanos’ assertions by saying that Alibaba has provided “full disclosure” in terms of its logistics business. Tsai also added that “He doesn’t seem to try to understand the business and understand the power of the digital economy in China.” Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 69 funds owned $5.52 billion worth of Alibaba Group Holding Ltd (NYSE:BABA)’s shares on June 30, which accounted for 2.80% of the float.
On the next page, we’ll examine the latest on JetBlue, Ruby Tuesday, and Radiant Logistics.