In contrast to yesterday’s action, the major indexes are all green today, with crude futures leading the way, up by 5%. Among the stocks generating the most buzz this morning are Under Armour Inc (NYSE:UA), Ruby Tuesday, Inc. (NYSE:RT), Gap Inc (NYSE:GPS), Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA), and Intercept Pharmaceuticals Inc (NASDAQ:ICPT), all of which were making big moves even before the market opened. Let’s take a closer look at why these stocks have stirred up intense interest and see what the hedge funds that we track think of them.
At Insider Monkey, we track around 785 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 Inc (NYSE:UA) shares may look like they have fallen by almost 50% (technically they have) but the reality is that the stock has basically undergone a two-for-one stock split, with Under Armour class C shares being distributed to shareholders of record on Friday. Those class C shares, which constitute non-voting stock, will begin trading today under the symbol UA.C. Besides the stock split, there isn’t much else of note concerning the stock at this time, which is otherwise trading down by 0.34% today when factoring out the stock split. 25 elite funds in our system held 1.3% of Under Armour Inc (NYSE:UA)’s float at the end of December.
Ruby Tuesday, Inc. (NYSE:RT) is off by 14% this morning after the restaurant chain reported disappointing third quarter of fiscal year 2016 financial results. For the quarter, Ruby Tuesday earned $0.03 per share on revenue of $271.47 million, missing consensus estimates by $0.02 per share and $12.67 million, respectively. Same-restaurant sales retreated by 3.1% year-over-year, which included a 140 basis point negative impact due to temporary store closures due to severe winter weather. Guidance also wasn’t pretty, with the company cutting its full fiscal year 2016 EPS guidance to $0.05-to-$0.08 from the previous $0.12-to-$0.17 range. Management expects same-store sales to decline by roughly 1% year-over-year for the fiscal year. The total number of elite funds long Ruby Tuesday, Inc. (NYSE:RT) fell by almost half to 11 by the end of December, from 20 at the end of September. Among the stalwart shareholders was Jim Simons’ Renaissance Technologies, which raised its stake by 12% to 963,169 shares.
On the next page we examine why Gap Inc, Ulta Salon Cosmetics & Fragrance, and Intercept Pharmaceuticals are all trending this morning.