With the pivotal Federal Reserve FOMC meeting beginning and investors still on edge over weak crude prices, shares of Lumber Liquidators Holdings Inc (NYSE:LL), Symantec Corporation (NASDAQ:SYMC), SunPower Corporation (NASDAQ:SPWR), SolarCity Corp (NASDAQ:SCTY), and First Solar, Inc. (NASDAQ:FSLR) are trending for various reasons. Let’s take a closer look.
Moreover, we will also examine relevant hedge fund sentiment toward the equities. Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by 52 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. 48.6% gain for the S&P 500 Index (see the details here). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).
“In the past week, I’ve received information (I can’t reveal the details at this point) which leads me to believe that it’s likely that senior management of Lumber Liquidators: 1) Wasn’t aware that the company was selling Chinese-made laminate that had high (non-CARB2-compliant) levels of formaldehyde; and 2) Made the decision to continue selling the product even after the 60 Minutes story aired in large part because they genuinely believed that the product was safe and compliant.”
Seeing as shorts make up 40% of Lumber Liquidators Holdings Inc (NYSE:LL)’s float, day-traders and algo’s are speculating that Tilson’s short covering could prompt more short covering by other bearish traders. Among the funds we track, a total of 13 held long positions in Lumber Liquidators at the end of September, amassing stakes equal to around 9% of the company.
The analysts at Morgan Stanley are more bullish on Symantec Corporation (NASDAQ:SYMC) today, as they upgraded the computer security company to ‘Overweight’ from ‘Equal Weight’ and raised their price target to $26 per share from $24 per share. Morgan Stanley’s upgrade comes just days after the analysts at Citigroup wrote that Symantec Corporation (NASDAQ:SYMC) could face “less favorable trends” after performing a survey of 51 Chief Information Security Officers. With the sell-side somewhat divided, the buy-side is becoming more optimistic, with 38 elite funds long the stock at the end of September, up by three over the quarter. Ken Griffin’s Citadel Investment Group holds 9.43 million shares of Symantec as of September 30.
On the next page, we examine SunPower Corporation, SolarCity Corp, and Santander Consumer USA Holdings Inc.