Mobileye NV (MBLY), Peabody Energy Corporation (BTU), and American Midstream Partners LP (AMID) Are Today’s Danger Zoned Stocks

Page 1 of 2

Among the largest movers in the red today early morning were Mobileye NV (NYSE:MBLY), falling by 4.7%, Peabody Energy Corporation (NYSE:BTU) sliding by more than 12%, and American Midstream Partners LP (NYSE:AMID), which cratered by nearly 16% at the time of writing.

This is the second day that Mobileye NV (NYSE:MBLY) is struggling after the short seller Criterion Research set a short term price target of $25 on the developer of technologies for camera-based advanced driver assistance systems (ADAS). Currently the stock is trading at $46. The analysts believe that the company is riding on the hype of the self-driving car, which still needs a lot of time for perfection. As far as hedge fund sentiment around Mobileye NV (NYSE:MBLY) is concerned, it is significantly positive. Among the hedge funds that we track, a total of 39 had an aggregate investment of $633.09 million at the end of June as compared to 35 firms with $452.31 million at the end of the March. Israel Englander‘s Millennium Management is one of the prominent stockholders of Mobileye NV (NYSE:MBLY) holding some 1.04 million shares valued at $55.43 million.

An everyday investor does not have the time or the required skill-set to carry out an in-depth analysis of equities and identify companies with the best future prospects like a fund with the knowledge and resources of Millenium can. However, it is also not a good idea to pay the egregiously high fees that investment firms charge for their stock picking expertise. Thus a retail investor is better off to monkey the most popular stock picks among hedge funds by him or herself. But not just any picks mind you. Our research has shown that a portfolio based on hedge funds’ top stock picks (which are invariably comprised entirely of large-cap companies) falls considerably short of a portfolio based on their best small-cap stock picks. The most popular large-cap stocks among hedge funds underperformed the market by an average of seven basis points per month in our back tests whereas the 15 most popular small-cap stock picks among hedge funds outperformed the market by nearly a percentage point per month over the same period between 1999 and 2012. Since officially launching our small-cap strategy in August 2012 it has performed just as predicted, beating the market by over 60 percentage points and returning over 118%, while hedge funds themselves have collectively underperformed the market (read the details here).

Peabody Energy Corporation (NYSE:BTU), on the other hand received an unfavorable court ruling as a federal appeals court decided to go on with Obama administration’s new clean air standards for power plants, which are aimed at cutting the nationwide emissions by 32% by 2030. Earlier, Peabody Energy Corporation (NYSE:BTU) along with 15 other states had tried to temporarily block this plan.As for Peabody Energy Corporation (NYSE:BTU) professional money managers have been pouring in the company despite the fact that its stock price depreciated by more than 62% during the second quarter.

Page 1 of 2