Pandora Media Inc (P) and Zynga Inc (ZNGA) Among Hedge Funds’ Favorite Penny Stocks

In Weatherford International Plc (NYSE:WFT), there were 29 funds in our database holding shares at the end of September, down by five over the quarter. Collectively, these funds amassed $578.97 million worth of stock, or around 12.80% of the outstanding shares at the end of September. Weatherford International Plc (NYSE:WFT)’s stock has lost 30% since the beginning of the year and fell below the $5 threshold at the beginning of June. The company provides products and services for evaluation, drilling and completion of oil and natural gas wells, and also provides pipeline construction and commissioning. In November, Weatherford International Plc (NYSE:WFT) hired advisers to sell some of its business units starting in the first quarter of 2018. The company has a huge debt pile, which gives investors reasons to concerns, but the company’s restructuring plan, might allow it to scale down, but some analysts are still reluctant to boost the company’s ratings. For example, Citi downgraded the stock to ‘Neutral’ from ‘Buy’ in November and cut the price target to $4.20 from $5.60, saying that the company’s free cash flow could be limited through 2020.

New York REIT Inc (NYSE:NYRT) saw 29 investors tracked by us long the stock at the end of the last quarter, compared to 33 funds a quarter earlier. However, the aggregate value of these funds’ positions inched up to $385.53 million from $372.56 million during the third quarter and represents roughly 29.30% of the company as of the end of September. Recently, New York REIT Inc (NYSE:NYRT), which is winding down its properties and undergoing liquidation, sold its property on 1440 Broadway for $520 million, which after paying off the loan resulted in net proceeds of $192.9 million. The REIT also put three other properties under contract for $103.1 million. New York REIT Inc (NYSE:NYRT)’s stock has slid by 61% since the beginning of the year and the company declared a liquidating dividend of $2.07 per share in November and $1.0 per share in December.

There were 31 investors holding $699.37 million worth of Zynga Inc (NASDAQ:ZNGA)‘s stock, representing 21.40% of the company’s outstanding stock, at the end of September, down from 38 funds with $694.30 million worth of shares a quarter earlier. Shares of Zynga Inc (NASDAQ:ZNGA) surged by 53% since the beginning of the year. In November, the developer of social games posted its third-quarter results, which included EPS of $0.02, in line with estimates, while revenue of $224.60 million increased by 23.1% on the year and was $12.62 million higher than expected. In addition, Zynga Inc (NASDAQ:ZNGA) announced the sequal to its hit Scrabble-like game, Words With Friends 2.

In Community Health Systems (NYSE:CYH), the number of bullish investors also declined to 35 from 38 during the third quarter, while the total value of their positions slid to $136.13 million from $206.12 million and was equal to approximately 15.50% of the company at the end of September. Community Health Systems (NYSE:CYH)’s stock has lost over 28% year-to-date, as the company missed profit and revenue estimates for the third quarter and the profit estimates for the second. In addition, Community Health Systems (NYSE:CYH) posted annual revenue decline for the last six quarters. Recently, JPMorgan analysts downgraded Community Health Systems (NYSE:CYH)’s stock to ‘Underweight’ citing structural changes in the hospital industry, balance sheet leverage and no benefit from the GOP tax reform.

The most popular penny stock among the investors in our database is Pandora Media Inc (NYSE:P). At the end of September, 49 funds held $1.19 billion worth of the company’s stock, which represented 63.80% of the outstanding shares. During the third quarter, the number of investors long the stock remained unchanged, while the total value of their positions fell by 13.84%. Last year, Pandora Media Inc (NYSE:P) captured the attention of activist investor Keith Meister‘s Corvex Management, which took an 8.8% stake and urged the company to consider a sale, but no deal was made. Earlier this year, Sirius XM Holdings Inc. (NASDAQ:SIRI) has made a $480 million investment in Pandora Media. In addition, Pandora Media Inc (NYSE:P) has got in the cross hairs of another activist, Barry Rosenstein of JANA Partners. JANA holds around 16.32 million shares of Pandora Media as of the end of September and in his second-quarter letter to investors, Rosenstein said that Pandora represents a business “with a large base of users and an enormous opportunity to grow advertising revenues and to run the business mode efficiently.

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