It’s Monday and Wall Street is once again upgrading and downgrading stocks. As a result, several stocks are more closely watched by traders than usual. In this article, let’s analyze what analysts have to say about Wynn Resorts, Limited (NASDAQ:WYNN), e.l.f. Beauty Inc (NYSE:ELF), Procter & Gamble Company (The) (NYSE:PG), Zillow Group Inc Class C (NASDAQ:Z), and Roku Inc (NASDAQ:ROKU) and how some hedge funds are positioned among them.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Wynn Resorts, Limited (NASDAQ:WYNN) shares are trending after David Katz of Jefferies upgraded the stock to ‘Buy’ from ‘Hold’. Katz believes the company will benefit from the better outlook for Macau given that there seems to be more economic improvement in China than before. The analyst has a Macau GCR market forecast of 10% up from the previous 5.3%. Katz has a $170 price target up from the previous $119. Wynn Resorts, Limited (NASDAQ:WYNN) was in 46 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 43 hedge funds in our database with WYNN positions at the end of the previous quarter.
e.l.f. Beauty Inc (NYSE:ELF) is in the news after Andrea Teixeira of JPMorgan change her rating to ‘Neutral’, up from the previous ‘underweight’. The analyst also has a price target of $13, almost double from the previous price target of $7. In terms of hedge fund holdings, Mario Cibelli’s Marathon Partners increased its stake by 3% to 4.15 million shares as of the end of 2018.
Procter & Gamble Company (The) (NYSE:PG) shares are up over 1% after Wells Fargo upgraded the stock to ‘Outperform’ from ‘Market Perform’. The consumer goods company trades for a reasonable 21.8 times forward earnings estimates and has a 2.77% dividend yield around current prices. Shares are up over 12% year to date. PG was in 60 hedge funds’ portfolios at the end of December. There were 53 hedge funds in our database with PG positions at the end of the previous quarter.
Zillow Group Inc Class C (NASDAQ:Z) shares are in the green after after Cowen upgraded the stock to ‘Outperform’ from ‘Market Perform’. Cowen analyst Thomas Champion also has a $46 price target, up $6 from the previous target. Champion believes Zillow’s new management team of Rich Barton and Allen Parker look well suited to transform Zillow’s business model and to help it achieve its targets, particularly as it pertains to the internet segment. Andreas Halvorsen’s Viking Global initiated a new position in the stock of 4.65 million shares in Q4. The stock is up 18% year to date.
Traders are watching Roku Inc (NASDAQ:ROKU) after Citi downgraded the stock to ‘Sell’ with a $50 price target. Citi previously had a ‘Neutral’ rating and a $53 price target. Mark May of Citi notes that Roku trades at a substantial 70% premium to peers and thinks the stock might be a little ahead of itself given the massive stock rally year to date. Joel Ramin’s 12 West Capital Management increased its position by 30% to 959,782 shares at the end of December.