Zebra Technologies Corp. (ZBRA) Sinking On Lower Margins, Tepid Guidance

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 over 123% and beating the market by more than 66 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.

Clovis Capital Partners, managed by Scott Scher and Michael Prober, appears to be one fund we track that nailed its investment in this stock and profited greatly from it. The stock ranked as one of the fund’s top picks heading into the second quarter, though it had also pulled some profit from the stock in the first quarter, selling off 55% of its position (it ranked as the fund’s top pick at the end of 2014). The fund also held a position of call options underlying 100,000 shares, which it opened during the first quarter, and which appears likely to have been exercised given the strong upward momentum of the stock throughout the first half of the year. Daniel Och’s OZ Management was the largest shareholder of the company among those we track as of March 31, while Mario Gabelli’s GAMCO Investors held over 100,000 shares of the company as of June 30. Ken Griffin’s Citadel Advisors appears to have perfectly timed its exit from the stock, selling its 92,683 shares during the second quarter.

Disclosure: None