Although the three major indexes were little-changed for the first week of the quarter, five stocks, Tyson Foods, Inc. (NYSE:TSN), salesforce.com, inc. (NYSE:CRM), Wal-Mart Stores, Inc. (NYSE:WMT), First Solar, Inc. (NASDAQ:FSLR), and Solaredge Technologies Inc (NASDAQ:SEDG), each showed considerably more volatility than the broader market.
In this article, we will recap some of the latest analyst commentary concerning the five stocks. In addition, we are going to look at the hedge fund sentiment towards the companies in question.
Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 740 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).
Tyson Foods, Inc. (NYSE:TSN) shares fell almost 9% on Friday due to a downgrade to ‘Sell’ from ‘Buy’ and price cut to $40 from $100 from Pivotal Research. The firm gave the thumbs down to Tyson Foods because it feels a recent class action lawsuit alleging systematic collusion could lead to more investor scrutiny over the sustainability of chicken producers’ margins. The additional scrutiny could cause Tyson’s valuation multiple to shrink. Tyson, for its part, commented:
“An analyst report has been issued this morning commenting on pending antitrust litigation which was filed over a month ago. While we don’t normally make substantive comments regarding pending litigation, we dispute the allegations in the complaints as well as the speculative conclusions reached by the analyst, and we will defend ourselves in court. Contrary to what the analyst assumed, we have not made any changes to our business practices in response to the complaints.”
Akshay Jagdale, Jefferies analyst, for his part, buys Tyson’s argument. According to Jagdale’s research, the chicken price movements since 2008 can be readily explained by sector fundamentals. The analyst also feels that the chicken sector is highly competitive and that the weakness in Tyson stock isn’t fully justified. Among the funds we track, 40 funds owned $1.77 billion worth of Tyson Foods, Inc. (NYSE:TSN) and accounted for 7.10% of the float on June 30, versus 40 funds and $2 billion respectively on March 31.
Courtesy of speculation that it might be interested in buying Twitter Inc (NYSE:TWTR), salesforce.com, inc. (NYSE:CRM) shareholders have experienced the same roller-coaster ride that Twitter shareholders have experienced this week (only in reverse). After falling sharply on the thought that it might buy Twitter on Wednesday, salesforce.com shares returned back to normal levels on Thursday and Friday. Helping assuage some shareholder concerns was CEO Marc Benioff comment, made on the analyst day, which stated: “While we look at everything, we pass on almost everything.”
The sell side liked that statement, with Alex Zukin of Piper Jaffray saying that Benioff’s comment suggests the potential of a major acquisition is ‘dramatically lower’. Zukin has a $100 price target and an ‘Overweight’ rating on the cloud company. A total of 60 funds tracked by us were long salesforce.com, inc. (NYSE:CRM) aat the end of June, down by three funds from the previous quarter.
On the next page, we examine what analysts had to say about Wal-Mart Stores, First Solar, and Solaredge Technologies.