Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Hedge Funds Beat Analysts On Seeing Weakness In Mattel And Caterpillar, But They Disagree On Blackberry

Page 1 of 2

Red flags were thrown up by analysts today regarding the prospects of three companies, each of which had their earnings estimates and price targets cut amid slowing growth. The companies are Blackberry Ltd (NASDAQ:BBRY), Mattel, Inc. (NASDAQ:MAT), and Caterpillar Inc. (NYSE:CAT), and we’ll study the analyst action on each as well as the sentiment that elite hedge funds have for the three public companies’ shares.

BlackBerry Ltd (NASDAQ:BBRY), BlackBerry corner, fuorisalone, people, black, editorial, mobile, design,

Adriano Castelli /

Let’s start with Blackberry Ltd (NASDAQ:BBRY), which remains a popular and even iconic company for its once-dominant position in the smartphone market, even as that buffet of a position has since eroded into the table scraps left behind by Apple Inc. (NASDAQ:AAPL)’s iPhones and Google Inc (NASDAQ:GOOG) Android-powered devices. Analyst pessimism towards Blackberry has been in full force since the company’s latest earnings results were released last week.

Follow Blackberry Ltd (NASDAQ:BBRY)
Trade (NASDAQ:BBRY) Now!

Credit Suisse, Wells Fargo, UBS, and Goldman Sachs have all cut either their earnings estimates or price targets for the company, or both. Goldman cut its price target for the stock to $7, while UBS cut its to $6.50. Credit Suisse’s price target is even slimmer at $6, although that wasn’t changed during its most recent update on Blackberry. Instead it cut its revenue and earnings estimates for the Canadian company’s 2016 and 2017 fiscal years, the former of which is now halfway done. Wells Fargo also cut its price target on Blackberry, to between a range of $6.50 and $7.10, and lowered its earnings estimates for its 2017 fiscal year to a loss of $0.17 per share. Perhaps most troublesome is that despite a slew of recent acquisitions, Credit Suisse predicts a large drop in revenue to just $434 million in fiscal 2017 from its $793 million projections for Blackberry’s fiscal 2016. Blackberry is down by over 5% today amid the continued ill will among analysts, dragging its year-to-date losses to over 43%.

The smart money tracked by Insider Monkey doesn’t think nearly as ill of Blackberry Ltd (NASDAQ:BBRY) as analysts, owning 15.10% of its outstanding shares. While the number of investors with Blackberry positions did decline to 23 from 27 in the second quarter, the value of their holdings was up by $30 million to $653 million, despite a 10% drop in share price during that time. So the investors who believe in the company hunkered down and fortified their positions. Among them was Kahn Brothers, founded by the late Irving Khan, and Nelson Obus’ Wynnefield Capital, each of which added to their positions in the second trimester.

Whether elite hedge funds collectively like a stock or not is an important metric to consider, as these large investors show a great level of skill and expertise when it comes to picking stocks. Over the last few years equity hedge funds have trailed the market by a large margin, but that’s mostly due to their hedging and short positions, which perform poorly in a bull market. Their long positions performed far better, especially their small-cap picks, which have the potential to beat the market by 95 basis points per month on average, as our backtests showed. Our small-cap strategy involves imitating a portfolio of the 15 most popular small-cap picks among hedge funds and it has returned 118% since August 2012, beating the S&P 500 ETF (SPY) by over 60 percentage points (read more details here).

Mattel, Inc. (NASDAQ:MAT) is not nearly as maligned as Blackberry among analysts. Oppenheimer reiterated its ‘Outperform’ rating on the stock, though it did lower its price target on it to $27. The firm also lowered its earnings projections for Mattel, though primarily due to the strong U.S dollar. Mattel had previously announced that foreign exchange would hurt its revenue growth by between 4% and 6% this year. Mattel is now down by 30% in 2015 given its 4% loss in trading today, hurt by the company’s second quarter results released in July which revealed a loss of $11.4 million and a continued sales decline for the company’s Barbie dolls.

Follow Mattel Inc (NASDAQ:MAT)
Trade (NASDAQ:MAT) Now!

Hedge funds appear to have been predicting the poor performance of Mattel, Inc. (NASDAQ:MAT), as they were quite bearish on the company in the second quarter, with ownership declining to 23 from 26, and the value of their holdings falling by over $100 million to $270 million despite a rise of over 10% in the stock’s price, and they held just 3.10% of its shares on June 30. Shares have slid by about 15% since the end of June, so hedgies were cashing out at the right time. Glenn Russell Dubin’s Highbridge Capital Management and Paul Tudor Jones’ Tudor Investment Corp were among those cashing out of the stock.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!