While the S&P 500 is firmly in the green and the Dow is up by more than 70 points, Harley-Davidson Inc (NYSE:HOG), Infoblox Inc (NYSE:BLOX), American Equity Investment Life Holding (NYSE:AEL), Navistar International Corp (NYSE:NAV), and Och-Ziff Capital Management Group LLC (NYSE:OZM) are all deep in the red on Wednesday. Let’s find out why investors are selling off these equities and analyze what hedge funds think of each of them.
Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).
A negative analyst report has sent shares of Harley-Davidson Inc (NYSE:HOG) down by more than 7% today. According to analyst David MacGregor of Longbow, channel checks indicate that rival Polaris’ Indian motorcycle brand has taken some of Harley-Davidson’s market share in the sportster and cruiser segments in the first quarter. The checks could indicate softer-than-expected results for Harley in its next earnings report. Harley-Davidson Inc (NYSE:HOG) is an iconic brand but it needs to do better among millennials, which recently passed baby boomers as the most populous generation. The number of elite funds in our system long Harley-Davidson stayed steady at 24 during the fourth quarter.
Shares of Infoblox Inc (NYSE:BLOX), which provides critical network services that protect Domain Name System (DNS) infrastructure, automate cloud deployments, and increase the reliability of enterprise and service provider networks around the world, are off by around 8% on abnormally high volume on seemingly no news of note. A regulatory filing that the company’s EVP of Worldwide Field Operations has agreed to step down was released today, but given that the EVP isn’t a C level executive officer, the market is likely either overreacting to the news, or some other unknown factor is at play.
In terms of ownership, hedge funds have been bullish on Infoblox Inc (NYSE:BLOX). Our data shows that the number of elite funds holding the company increased by three to 27 as of the end of December. Those 27 funds held almost a quarter of the tech company’s outstanding shares. Jim Simons‘ Renaissance Technologies owned 971,500 of those shares at the end of 2015.
On the next page we examine the trading activity in American Equity Investment Life Holding, Navistar International Corp, and Och-Ziff Capital Management Group LLC.
American Equity Investment Life Holding (NYSE:AEL) shareholders received some bad regulatory news after the Labor Department announced new regulations that make it harder for brokers to sell index annuities. Under the new rules, brokers will have to release more information on how they are compensated for sales of index annuities and other complex financial products. The process could reveal conflicts of interest that might lower demand. Given that American Equity Investment Life Holding (NYSE:AEL) is one of the largest sellers of index annuities, investors have sold the stock off, with shares down by 16%. The number of shareholders of American Equity in our database dropped to 19 as of the end of December, down from 24 three months earlier.
Navistar International Corp (NYSE:NAV) is off modestly today after being down by more than 7% at one point this morning. It is unclear what caused the sell-off. Navistar did agree to settle SEC charges relating to the company potentially misleading investors on the ability of its new truck engine to meet U.S emission standards. The charges were settled for $7.5 million late last week. Hedge funds are bullish on Navistar International Corp (NYSE:NAV). Of the 785 or so investors in our database, 16 of them held over half of the company’s float at the end of December. Among them was Carl Icahn‘s Icahn Capital LP, with a holding of over 16.00 million shares.
Och-Ziff Capital Management Group LLC (NYSE:OZM) is off by 7.5% this afternoon on the back of technical selling. Due to poor financial performance, Och-Ziff Capital Management Group LLC (NYSE:OZM) shares have fallen by 34% year-to-date and are off by almost two-thirds in the last twelve months. 15 elite funds held roughly 2.5% of the company at the end of December. Crispin Odey‘s Odey Asset Management Group was the largest smart money shareholder at that time, with a holding of 4.85 million shares.