U.S. markets are trading up in the first day of the week, helped by Janet Yellen’s speech, in which she reiterated the plans to raise the interest rates, although she avoided to give a timeline on the decision. Major U.S. stock indexes are also being helped by a rally in energy shares and a recuperation in financial stocks, which had experienced considerable weakness following Friday’s jobs report. However, a few stocks, including Tyson Foods, Inc. (NYSE:TSN), Fitbit Inc (NYSE:FIT), Mirati Therapeutics, Inc. (NASDAQ:MRTX), Hercules Offshore, Inc. (NASDAQ:HERO) and Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) are trading down on Monday afternoon. So, let’s take a look into the events behind the declines of these stocks, and analyze what the hedge funds in our database think about the companies in question.
While there are many metrics that investors can assess in the investment process, hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).
Tyson Beat Up By BMO
Let’s start with Tyson Foods, Inc. (NYSE:TSN), whose stock has inched down by 4% on Monday afternoon, after analysts at BMO Capital Markets downgraded the stock to ‘Market Perform’ from ‘Outperform’, while trimming their price target to $69 from $78, arguing that valuations for meat producers’ stocks are already high enough. A total of 40 hedge funds among those we track were long Tyson Foods, Inc. (NYSE:TSN) at the end of the first quarter of 2016. In this group, we could highlight David Cohen and Harold Levy’s Iridian Asset Management, which last disclosed ownership of 7.63 million shares of the company, worth more than $500 million on March 31.
Fitbit Tumbles On Lowered Estimates
Next up is Fitbit Inc (NYSE:FIT), which is down by 2% in Monday trading, after Cleveland Research reportedly lowered its unit estimates for the company, citing increasing saturation of the fitness trackers market. Interestingly, Raymond James’ report, issued this morning, which assured that the firm left feeling confident on Fitbit’s future after meeting with its management team, could not help contain the tumble in the stock price. Overall, 30 funds in our database held more than 8% of Fitbit Inc (NYSE:FIT)’s float at the end of the first quarter. Among the most noteworthy stakes was the one held by Spencer M. Waxman’s Shannon River Fund Management, which initiated a new position in the company, comprising 2.45 million shares.