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A Look At Four Trending Stocks and Latest Developments Behind Their Moves

On Tuesday, the US stock market is deep in green territory, as investors are waiting for the news of the meeting from the Federal Reserve, which could set the first increase in interest rates for nearly a decade. In this article, we’ll take a look at some of the stocks that are in the spotlight today, including  Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), MFA Financial, Inc. (NYSE:MFA), Fitbit Inc (NYSE:FIT), and Kennametal Inc. (NYSE:KMT). Aside from the news that affected their moves, we are also going to assess the hedge fund sentiment towards these stocks.

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 135% since then and outperformed the S&P 500 Index by around 80 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.

The first on the list is Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), which has lost around 3% amid announcing the pricing of a secondary offering. The offering includes 10.3 million shares held by several shareholders, affiliated with Apollo Global Management, LLC and Star NCLC Holdings Ltd. at $57.65 per share. Among the funds we track, the number of investors in Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) remained unchanged at 38 during the third quarter. Together, they hold some 5.7% of the company’s common stock, while Richard Barrera‘s Roystone Capital Partners is the largest shareholder of Norwegian Cruise, owning 2.40 million shares valued at $137.5 million as of the end of September.

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MFA Financial, Inc. (NYSE:MFA)’s stock opened lower, but has since recovered, which has slightly offset the drop of the last several days. Last week the company announced its regular $0.20 dividend, which gives its stock a yield of 12%. Among the funds we track, MFA Financial, Inc. (NYSE:MFA) gained some popularity during the third quarter, with a total of 17 funds reporting long positions in the company, versus 14 funds a quarter earlier. However, these funds amassed just 2% of the company’s outstanding stock heading into the fourth quarter. Peter Rathjens, Bruce Clarke and John Campbell‘s Arrowstreet Capital is the largest shareholder of MFA Financial among the investors we follow. The fund increased its stake in the company by 11% during the third quarter to 4.81 million shares valued at $32.73 million.

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Next on our list is Fitbit Inc (NYSE:FIT), whose shares also opened lower but have since gained ground and are trading 3% in the green. There is no particular news behind the move, the stock most likely being dragged by the overall market bullishness. Among the funds in our database Fitbit Inc (NYSE:FIT) lost some appeal, with the number of funds long the stock falling by seven to 20 during the third quarter. John Griffin‘s Blue Ridge Capital cut its stake by 71% on the quarter to 1.04 million shares worth $39.0 million, as reported in its latest 13F filing.

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On the other hand, Kennametal Inc. (NYSE:KMT)’s stock has plunged by more than 14% so far today after the company announced a reduction in its previous guidance for fiscal 2016. According to a statement, Kennametal expects a decline of as much as 30-60% in the previously announced guidance for the year Fiscal 2016 adjusted EPS. The expectations were negatively affected by further reductions in their end markets on the back of lower industrial production. Earlier the company said it expected adjusted EPS between $1.50 and $1.70 for the full fiscal 2016. John W. Rogers‘s Ariel Investments is the largest holder of Kennametal Inc. (NYSE:KMT) stock at the end of the quarter among the funds we follow. In its latest 13F filing, Ariel Investments reported 9.61 million shares valued at $239.26 million.

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Disclosure: none.

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