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Hedge Fund Sentiment Says These Falling Stocks Are Good Buys

Among the largest decliners today are Sonic Corporation (NASDAQ:SONC), down by a little over 8%, CONN’s, Inc. (NASDAQ:CONN), slipping by just under 5%, and Raptor Pharmaceutical Corp. (NASDAQ:RPTP), falling by more than 5% so far in the day. Let’s look at the actions causing the downward movements in these stocks and whether hedge funds seeing any redeeming qualities in them.


Starting with Sonic Corporation (NASDAQ:SONC), the restaurant chain announced its same-store sales numbers for fiscal year 2015 yesterday, which has resulted in an 8% dip in the stock today. Sonic Corporation reported that its same-store sales were up by 7.3% for fiscal year 2015 which ended on August 31, as the company’s drive-in sales were up by 6.9% and its franchise drive-in sales rose by 7.3%.  The company also reported a 4.9% growth in same-store sales for the fourth quarter of fiscal 2015. The company expects the same-store sales to grow by just 2-4% during fiscal 2016. It was likely the latter point which was not received well by investors and has led to the stock decline today.

Let’s take a look at hedge fund activity on Sonic Corporation (NASDAQ:SONC) now. By the end of June, there were 24 hedge funds with an aggregate investment of $185.4 million in the stock. The number of bullish hedge funds increased from 21 at the end of first quarter and the total investments went up from $130.9 million, despite a 10% decrease in shares during the second trimester, so hedge funds were rather bullish on this stock overall. Hedge funds in our database also held around 12.4% of the company’s outstanding shares. Among the hedge funds that we track, Richard Chilton’s Chilton Investment Company leads the way with 2.2 million shares valued at $65.5 million as of June 30. Israel Englander‘s Millennium Management increased its holding in the stock by 133% to 1.1 million shares during the same period. Among the hedge funds that opened fresh positions in the stock were Dmitry Balyasny’s Balyasny Asset Management, which opened a new position of around 620,000 shares.

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