NCR Corporation (NCR) Shares Plummet Following Second Quarter Loss; Shorts Back In The Game

The shares of NCR Corporation (NYSE:NCR) are trading at $27.57, showing a year-to-date decline of 5.96%. Smart money held a bearish outlook of the company, with only 31 hedge fund managers investing $1.61 billion in the company at the end of the first quarter compared to aggregate investments of $1.82 billion a quarter earlier. The shares of NCR Corporation (NYSE:NCR) were up by 0.79% during the first quarter. Barry Rosenstein’s JANA Partners held the largest investment position in the company among the hedge funds in our database, with 14.81 million shares valued at $437.10 million.

Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 123% over the last 34 months, which is more than 66 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).

Keeping an eye out for insider activity allows investors to understand the insider sentiment on a stock. In the case of NCR Corporation (NYSE:NCR), the insiders have been disposing off their shares of the company throughout the year. Andrew Heyman, SVP and President, Financial Services at NCR Corporation, has sold 16,835 shares of the company year-to-date.

Considering all of these factors, we recommend investors to steer clear of the stock for the time being, as the short thesis proposed by Spruce Point is now looking much stronger following NCR’s inability to sell itself.

Disclosure: None