With the broader market down by more than half a percent, shares of International Game Technology Ordinary Shares (NYSE:IGT), Freshpet Inc (NASDAQ:FRPT), Advance Auto Parts, Inc. (NYSE:AAP), MannKind Corporation (NASDAQ:MNKD), and Valeant Pharmaceuticals Intl Inc (NYSE:VRX) are trending. Let’s find out why.
In addition, let’s also take a look at relevant hedge fund sentiment toward the stocks. But why do we track hedge fund activity? From one point of view we can argue that hedge funds are consistently underperforming when it comes to net returns over the last three years, when compared to the S&P 500. But that doesn’t mean that we should completely neglect their activity. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. In our back-tests covering the 1999-2012 period hedge funds’ top small-cap stocks edged the S&P 500 index by double digits annually. The 15 most popular small-cap stock picks among hedge funds also bested passive index funds by around 53 percentage points over the 36 month period beginning from September 2012 (see more details here).
Shares of International Game Technology Ordinary Shares (NYSE:IGT) are rallying after the company’s third quarter EPS beat estimates by $0.10 per share. For the quarter, International Game Technology earned $0.41 per share on revenues of $1.22 billion, with adjusted EBITDA of 414 million and operating income of $130 million.
International Game Technology Ordinary Shares (NYSE:IGT) CFO Alberto Fornaro said:
“Our third quarter results reflect the diversity of our business and disciplined operational management. Our synergy plans remain on track, free cash flow generation was strong, net debt was reduced, and our financial condition remains solid. We planned our first year as a combined company prudently; based on our year-to-date results and current top-line visibility, we are confident in reaching the top half of our 2015 adjusted EBITDA outlook.”
According to our data of around 730 elite funds, 19 funds were long 13.3% of the float at the end of June.
Shares of Freshpet Inc (NASDAQ:FRPT) are off more than 26% in morning trading after the company reported mixed earnings results. Although the company beat revenue estimates by $0.43 million, Freshpet missed earnings expectations by $0.02 per share. Further hurting the stock was soft guidance, with management expecting 2015 net sales of $115.5-$117 million, down from the previous $117-$119.5 million, and 2015 non-GAAP EBITDA to be $10-$11 million, a number substantially lower than management’s previous guidance of $12.5-$14 million. Hedge funds are ambivalent on the stock, as only 6 funds owned $25.17 million of Freshpet Inc (NASDAQ:FRPT) shares on June 30.
On the next page, we examine why Advance Auto Parts, MannKind, and Valeant are on the move.