UTi Worldwide Inc. (NASDAQ:UTIW) and Infoblox Inc. (NYSE:BLOX) had the dubious distinction of being two of the market’s worst performing stocks this morning, particularly when looking at stocks with a high volume of trading activity. Shares of UTi Worldwide are down by nearly 15% so far today, while Infoblox’s have dipped by 9.50%. The performance of the two companies and their stocks will be disappointing to the smart money investors that we track at Insider Monkey, which were relatively bullish on both companies during the second quarter.
Let’s start with UTi Worldwide Inc. (NASDAQ:UTIW), the company which offers supply chain services to companies transporting goods by air or sea. UTi Worldwide released its fiscal second quarter of 2016 financial results after the close of trading yesterday, and the results weren’t pretty. The company reported a loss of $0.70 per share for the quarter, widely missing analyst estimates of a loss of $0.05 per share. Its quarterly revenue of $913.9 million was also nearly $100 million short of estimates, and represented a 16.9% decline year-over-year.
Of the investment firms tracked by Insider Monkey, 14 of them had stakes in UTi Worldwide Inc. (NASDAQ:UTIW) on June 30, down by one during the second quarter. However the value of their stakes rose by 2% to over $363 million, even though the stock lost over 18% during the second quarter. So the smart money was clearly buying shares on their weakness in the expectation of a future turnaround, which has yet to materialize. However, it should also be noted that many of the investors we follow have a long-term horizon that stretches well beyond the latest earnings results. Claus Moller’s P2 Capital Partners was the largest shareholder of the company in our database as of June 30, owning over 11.27 million shares. Glenn J. Krevlin’s Glenhill Advisors opened a new 4.79 million-share position during the second quarter.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 118% and beating the market by more than 60 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
Let’s move on to Infoblox Inc. (NYSE:BLOX), which provides secure DNS and cloud services, among other enterprise solutions. Shares of the California company are down today after it announced weak guidance for the current quarter, which is its fiscal first quarter of 2016, following the close of the markets yesterday. Infoblox provided a guidance range of $0.05 to $0.06 for earnings per share, on revenue of between $86 million and $88 million for the quarter. Consensus estimates had pegged EPS at $0.08 on revenue of $82.18 million. For its fiscal fourth quarter of 2015, the results of which were also announced yesterday, Infoblox delivered EPS of $0.12 on revenue of $87 million.
Infoblox Inc. (NYSE:BLOX) is one of the top stock picks of tech investor Eric Bannasch, whose hedge fund Cadian Capital upped its stake in the company to 5.27 million shares last month, giving it a 9.2% ownership stake in the company. Malcolm Fairbairn’s Ascend Capital held an even 1.0 million shares on June 30. All told, there were 29 firms in our database that held positions in Infoblox on June 30, up from 28 on March 31, while their aggregate holdings also increased in value by more than 7% to over $282 million. Shares of Infoblox did rise by slightly over 10% during the second quarter, so there was some limited selling of shares by the funds we track. Shares are now down by over 31% in the third quarter.
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