With volatility officially back as the Dow Jones is off by 400 points in afternoon trading, Dreamworks Animation Skg Inc (NASDAQ:DWA), Fossil Group Inc (NASDAQ:FOSL), SouFun Holdings Ltd (NYSE:SFUN), Qunar Cayman Islands Ltd (NASDAQ:QUNR), and Las Vegas Sands Corp. (NYSE:LVS) are among the stocks deep in the red as investors sell each stock for various reasons. Let’s take a closer look.
In addition, let’s analyze hedge fund sentiment toward the stocks, if relevant. We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
It’s been a rocky 2016 for Dreamworks Animation Skg Inc (NASDAQ:DWA), as shares of the movie company are 7% in the red as the NASDAQ’s weakness and an analyst downgrade weigh on demand. Due of various reasons, the analysts at B. Riley downgraded Dreamworks Animation Skg Inc (NASDAQ:DWA) to ‘Neutral’ from ‘Buy’ while maintaining their $27 price target. Analysts outside of B. Riley have not been optimistic either, as seven analysts have ‘Sell’ ratings, three have ‘Hold’ ratings, and five have ‘Buy’ ratings. Hedge funds, on the other hand, were mixed on Dreamworks in the time period from June 30 to September 30. Although the number of funds inched up to nine from eight, the total value of their holdings in the stock declined to $493.53 million (representing 36.30% of the float) from $768.76 million.
Fossil Group Inc (NASDAQ:FOSL) also received some analyst ambivalence today, as Jefferies downgraded the watchmaker to ‘Neutral’ from ‘Buy’ and lowered their price target to $40 from the previous $68. Shares of Fossil Group Inc (NASDAQ:FOSL) fell by more than 5% on the back of the news. As justification for the downgrade, the Jefferies analyst noted that, watch revenues have ‘slowed dramatically from its once double-digit growth rate to a low-single percentage growth rate expected over the next few years, at best’ in part due to competition from wearables such as the iWatch. As wearables become cheaper and more accepted, Fossil will face more competition. Shares of the stock fell by 67% in 2015, but is trading at 10 times forward earnings. Joel Greenblatt’s Gotham Asset Management was among the 29 elite funds that owned shares of the company at the end of the third quarter.
On the next page, we examine SouFun Holdings Ltd, Qunar Cayman Islands Ltd, and Las Vegas Sands Corp.