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Best Buy Co., Inc. (BBY) Tumbles on Tepid Guidance

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Best Buy Co Inc (NYSE:BBY) shares have retreated by nearly 7% on heavy volume today after the company reported its first quarter results. Although Best Buy beat the consensus estimates on both the top and bottom lines, the tech retailer’s guidance came in well below market expectations. The company’s management expects second quarter earnings of $0.38-to-$0.42 per share, while Wall Street had expectations of $0.50 per share. Despite the first quarter earnings beat, Best Buy kept its full-year guidance unchanged, which further hinted at management’s somewhat bearish prognosis for the remainder of the year.  Investors remain concerned about future competition from Amazon.com, Inc. (NASDAQ:AMZN) as that company increases the availability of its one-day shipping feature. Best Buy Co Inc (NYSE:BBY) CFO Sharon McCollam also said she will be stepping down on June 14.

Best Buy Co., Inc. (NYSE:BBY) has experienced a decrease in activity from the world’s largest hedge funds of late. BBY was in 28 hedge funds’ portfolios at the end of March. There were 29 hedge funds in our database with BBY holdings at the end of the previous quarter. At the end of this article we will also compare BBY to other stocks including Credicorp Ltd. (USA) (NYSE:BAP), Pembina Pipeline Corp (NYSE:PBA), and Autoliv Inc. (NYSE:ALV) to get a better sense of its popularity.

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At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the largest position in Best Buy Co., Inc. (NYSE:BBY). AQR Capital Management has a $178.2 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Winton Capital Management, led by David Harding, holding a $81.7 million position; 0.9% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism comprise Jim Simons’ Renaissance Technologies, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and Israel Englander’s Millennium Management.

On the next page we’ll look at some funds that were bearish on Best Buy during Q1, as well as compare the stock to a handful of others with similar market caps.

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