With all three indexes in the green today, shares of Mobileye NV (NYSE:MBLY), Fitbit Inc (NYSE:FIT), Gladstone Capital Corporation (NASDAQ:GLAD), and ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) are heading in the opposite direction. Let’s take a closer look at why the four stocks are among today’s biggest losers. In addition, let’s analyze the latest trading action of elite investors in these stocks, if relevant.
Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 700 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).
Mobileye NV (NYSE:MBLY) shares have fallen by over 10% this morning after Morgan Stanley’s Adam Jonas lowered his price target on the stock to $57 from $80. Although Jonas kept his ‘Overweight’ rating on the stock, his bear case is now $20 per share versus the previous $30 per share. Jonas had this to say in regards to his thinking:
“Although advanced ADAS penetration could lead to earnings growth, large tech players add potential risk to Mobileye’s market share, margins and terminal growth rate. While we continue to believe that Mobileye is in pole position to lead the next wave of advancements, we have revised our forecasts to show a greater awareness of the competitive landscape that is taking form.”
Last month, Citron Research labled Mobileye NV (NYSE:MBLY) as the ‘short of the year’ for 2016 because of future competition and valuation concerns. Given the trend of more autonomous cars, other players such as Alphabet Inc (NASDAQ:GOOG) and car makers from Detroit will grab market-share over the next few years. Silicon Valley start-ups, such as the one founded by 26 year-old hacker George Hotz, could eventually give Mobileye a run for its money too. According to our data, hedge funds were becoming less optimistic about the stock, as the number of smart money shareholders of Mobileye fell by seven to 32 during the third quarter.
Fitbit Inc (NYSE:FIT) can’t escape the GoPro Inc (NASDAQ:GPRO) comparisons, as shares of the wearable tech company are off by 4.79% this morning on worries that it will also face commoditization, lower margins, and weaker sales due to increased competition. Like GoPro, Fitbit Inc (NYSE:FIT) is somewhat of a ‘fad’ stock, with its EPS and revenue rising rapidly as consumers snap up the company’s ‘it’ products. Investors are selling today because they fear that Fitbit’s fundamentals might deteriorate if the company loses that ‘must have’ status. GoPro has largely lost that status, after the company warned that its fourth-quarter results will be worse than expected. Because of soft demand, GoPro now anticipates sales of $435 million for the quarter, substantially below its previous guidance of $500 million-to-$550 million and analyst expectations of $511.9 million.
20 elite funds held 2.4% of Fitbit’s shares as of the latest 13F reporting period. That’s down from 27 elite funds that held shares on June 30.
On the next page, we examine the sliding shares of Gladstone Capital Corporation and ZIOPHARM Oncology Inc.