Here’s Why These Five Stocks Are on the Move

Crude futures are lower today as sentiment around the commodity remains negative due to consecutive weeks of disappointing inventory and rig count numbers.

The US stock market is mixed today, but in this article we take a closer look at Under Armour Inc (NYSE:UA), Verizon Communications Inc. (NYSE:VZ), Seadrill Partners LLC (NYSE:SDLP), Wynn Resorts, Limited (NASDAQ:WYNN), and MGM Resorts International (NYSE:MGM), which are on the move for various reasons. In addition, we are going to assess the hedge fund sentiment towards each stock.

At Insider Monkey, we track around 770 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).

Under Armour Falls Sharply On Earnings

Although it delivered another quarter of over 20% revenue growth, Under Armour Inc (NYSE:UA)’s stock is down by over 5% today after the apparel company reported earnings of $0.01 per share on sales of $1 billion. Despite Under Armour Inc (NYSE:UA)’s profits meeting analyst estimates and the company’s revenue increasing over the year, the company’s margins narrowed somewhat, with gross margin falling 70 basis points to 47.7%. Guidance isn’t very strong either and management sees full-year operating income coming in at $440 million to $445 million on revenue of $4.925 billion. Our data showed that fewer hedge funds were optimistic on Under Armour in the first quarter and among the funds that we track, the number of funds with holdings in Under Armour Inc (NYSE:UA) fell by four quarter-over-quarter to 21 at the end of March.

Verizon Reports Mixed Results

Just a few days after agreeing to buy Yahoo! Inc. (NASDAQ:YHOO)’s core internet sweepstakes, Verizon Communications Inc. (NYSE:VZ) reported mixed earnings for its second quarter, with EPS of $0.94 on sales of $30.53 billion. Although the telecom’s earnings per share was $0.02 ahead of analysts’ estimates (in spite of a large union strike), Verizon’s revenue missed the consensus estimate by $420 million. Cash flow from operations for the quarter was $5.4 billion and the company added a net 615,000 retail postpaid accounts during the quarter. Warren Buffett’s Berkshire Hathaway owned 15 million shares of Verizon Communications Inc. (NYSE:VZ) at the end of the first quarter.

On the next page, we examine why Seadrill Partners LLC, Wynn Resorts Limited, and MGM Resorts International are on the move.

Dividend Cut Sinks Seadrill Partners

Seadrill Partners LLC (NYSE:SDLP) shares have sunk by over 27% after the company announced it will reduce its quarterly distribution to $0.10 per unit from the previous $0.25 per unit. Management cut the dividend distribution due to the increase in the extended standby rate period for the West Capricorn and due to the termination of the drilling contract for the rig West Capella. Management also cut the distribution to preserve liquidity. Despite some contract cancellations, Seadrill partners still has an average contract term of around 2.7 years, and a total contract backlog of around $3.4 billion. Five investors from our database owned shares of Seadrill Partners LLC (NYSE:SDLP) at the end of the first quarter, down by one from the previous quarter.

Gaming Operators Rise on Las Vegas Sand Results

Wynn Resorts, Limited (NASDAQ:WYNN) and MGM Resorts International (NYSE:MGM) are 5% and 2.5% higher respectively after peer Las Vegas Sands Corp. (NYSE:LVS) reported its mass gaming revenue advanced in June, marking the first such monthly mass gaming year-over-year growth in around two years. Some traders are interpreting the rising mass gaming revenue as a signal that demand for gaming in the crucial Macau market is close to a bottom. If that is the case, MGM and Wynn’s cash flows in the crucial market could be stronger than previously expected. Of the two stocks, the investors tracked by us were more bullish on MGM, as 55 funds reported owning shares of the company as of the end of the first quarter. Comparatively, only 35 funds owned shares of Wynn Resorts, Limited (NASDAQ:WYNN).

Disclosure: none