It’s been a pretty bad day to be a bull on Wall Street after yesterday’s shocking Brexit vote. All three major indexes have plunged on Friday’s intraday trading.
Among the stocks in the spotlight today are J C Penney Company Inc (NYSE:JCP), Gramercy Property Trust (NYSE:GPT), BT Group plc (ADR) (NYSE:BT), Canadian Solar Inc. (NASDAQ:CSIQ), and NTT Docomo Inc (ADR) (NYSE:DCM). Let’s find out why these stocks are trending today and what the funds tracked by us think about the companies in question.
We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. 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).
J C Penney Completes Billion Dollar Refinancing
J C Penney Company Inc (NYSE:JCP) is trending after the retailer completed the refinancing of a $1.0+ billion, multiple year senior secured term loan credit facility. The refinancing represents a 75 basis point reduction and extends the maturity of the facility to 2023 from 2018. J C Penney expects to save $24 million in annualized interest rate expenses from the deal. Separately, analysts at B. Riley have reiterated their ‘Buy’ rating and $15 price target on the stock. Despite the good news, shares of the retailer are down today due to broader market weakness. Of the 766 elite funds we track, 32 funds owned $424.92 million worth of J C Penney Company Inc (NYSE:JCP)’s stock, which accounted for 12.50% of the float on March 31, versus 27 funds and $272.6 million, respectively, a quarter earlier.
Gramercy Property Provides Update on Brexit Exposure; Shares Off Only Half a Percent
Not all companies are equally affected by Britain’s shocking decision to leave the EU yesterday. According to Gramercy Property Trust (NYSE:GPT), the company only has capital exposure of GBP 36 million and current NOI of GBP 2.0 million in exposure. The exposure is mainly derived from Gramercy’s 80% interest in three logistics assets and a 50,000 square foot office facility in the United Kingdom. The four assets are owned without leverage and as previously stated, Gramercy plans to dispose the four assets over the next 12 months. A total of 13 funds tracked by us owned shares of Gramercy Property Trust (NYSE:GPT) at the end of the first quarter.
On the next page, we examine BT Group, Canadian Solar, and NTT Docomo.
BT Group Drops On Brexit Vote
BT Group plc (ADR) (NYSE:BT), the holder of British Telecommunications, has been absolutely punished by the market after yesterday’s Brexit vote. Shares of the telecom holding company have retreated 18% on the day as traders factor in the British Pound’s over 8% retreat versus the dollar since yesterday and the increased potential for a British recession. If the pound continues to depreciate against the dollar or if Britain enters a recession, BT Group’s dollar earnings will be lower. At the end of March, 11 funds tracked by us had a bullish position in BT Group plc (ADR) (NYSE:BT) at the end of March.
Solar No Safe Haven
Canadian Solar Inc. (NASDAQ:CSIQ)’s shares are off by 9% in afternoon trading due to the ‘risk-off’ sentiment precipitated by yesterday’s Brexit vote and due to a tornado that damaged the company’s solar cell plant in Funing County, Jiangsu Province, China. Although Canadian Solar expects to recover all of its financial losses through insurance at the moment, the company had anticipated production from the plant to represent 15%-20% of its solar cell requirements for the quarter. Canadian Solar now has to cover its needs by increasing output from its Suzhou solar cell factory, and by buying solar cells from third party suppliers. Although the company expects to maintain annual module shipment guidance, some traders think the additional spending could cause margins to be lower than what many thought previously. The number of funds with holdings in Canadian Solar Inc. (NASDAQ:CSIQ) inched up by one quarter-over-quarter to 17 at the end of March.
NTT Docomo to Potentially Get Billion Dollar Payment
NTT Docomo Inc (ADR) (NYSE:DCM) is in the spotlight today after an international court ordered Tata Sons Ltd to pay NTT DoCoMo $1.2 billion to buy the Japanese firm’s stake in a joint venture. DoCoMo had the right to request Tata to find a purchaser for its stake at either fair market value or 50% of the original price. Tata failed to find an agreeable buyer and India’s government prevented Tata from buying the stake. Given the international court’s decision, it is unclear whether the Indian government will change its mind. Just six funds from our database were long NTT Docomo Inc (ADR) (NYSE:DCM) at the end of March, up by three funds from the previous quarter.