Sarepta Soars to 150% Q3 Gains, Wal-Mart Closes Jet Deal, SeaWorld Sinks & More

After sharp moves over the past few weeks, investors are collectively calm at the moment as the market awaits the Fed’s decision on whether to raise interest rates or not.

Among the stocks capturing attention from traders early this morning are SeaWorld Entertainment Inc (NYSE:SEAS), Ascena Retail Group Inc (NASDAQ:ASNA), Wal-Mart Stores, Inc. (NYSE:WMT), Encana Corp (USA) (NYSE:ECA), and Sarepta Therapeutics Inc (NASDAQ:SRPT). Let’s take a closer look at the events drawing their attention and use the latest 13F data to see how successful hedge funds are positioned in each stock.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 750 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

SeaWorld Entertainment Inc (NYSE:SEAS) shares are sinking by over 6% in after-hours trading after the company said that it will pay a cash dividend of $0.10 per share to shareholders of record at the close of business on September 29, down from the previous payout of $0.21 per share. After that, SeaWorld will suspend its dividend completely in favor of redeploying capital for opportunistically repurchasing shares during the remainder of 2016. Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 16 funds were long around $84.32 million worth of SeaWorld Entertainment Inc (NYSE:SEAS) shares on June 30, which accounted for 6.60% of the float.

Ascena Retail Group Inc (NASDAQ:ASNA)‘s stock is 23% in the red after the company’s earnings and guidance badly missed estimates. For its fourth quarter of fiscal year 2016, Ascena Retail earned $0.08 per share, versus estimates of $0.16. For its fiscal year 2017, Ascena’s management expects EPS of $0.60-to-$0.65, while the average analyst estimate had called for $0.83. Ascena’s prediction of fiscal 2017 revenue in the range of $6.9 billion-to-$7 billion, also came in lower than the consensus mark of $7.17 billion. Some smart money funds headed for the exits in the second quarter, as 23 funds that we track were bullish on Ascena Retail Group Inc (NASDAQ:ASNA) on June 30, six funds fewer than on March 31.

On the next page, we’ll take a closer look at the latest news concerning Wal-Mart, Encana, and Sarepta Therapeutics.

Wal-Mart Stores, Inc. (NYSE:WMT) has officially closed on its $3.3 billion acquisition of Jet.com, as it attempts to make online headway against Amazon.com, Inc. (NASDAQ:AMZN). Wal-Mart expects “some marginal dilution above its initial estimate” of $0.05 in dilutive impact to fiscal year 2017 earnings per share. Jet.com and Walmart.com will operate under separate brands but will share the same talent and technology. In addition, the founder of Jet.com, Marc Lore, will lead both websites. Warren Buffett‘s Berkshire Hathaway owned over 40 million shares of Wal-Mart Stores, Inc. (NYSE:WMT) at the end of the second quarter, down by 28% from the end of the first quarter.

Encana Corp (USA) (NYSE:ECA) is off by nearly 5% in after-hours trading after the company announced a marketed share issue of 107 million common shares in addition to granting the underwriters a 30-day option to sell another 16.05 million shares in an overallotment option. Encana plans to use half of the money raised to fund part of its capital program in 2017, with a big focus on the Permian. Encana’s management plans to use the rest of the capital raised to repay debt. The number of funds in our system with holdings in Encana Corp (USA) (NYSE:ECA) fell to 26 at the end of June, down by 2 quarter-over-quarter.

Last but not least, Monday’s star performer, Sarepta Therapeutics Inc (NASDAQ:SRPT) is in the spotlight again after its management gave some details on the potential cost of eteplirsen, which the FDA recently granted accelerated approval to. According to a conference call, the company’s management expects the drug to cost around $300,000 per year in the United States. Sarepta also said that it expects to file a European MAA by the end of 2016. Although Sarepta’s management didn’t give sales expectations for the drug, many analysts are bullish on the drug’s prospects. 20 savvy (and wealthier) funds in our database were long Sarepta Therapeutics Inc (NASDAQ:SRPT) as of the most recent 13F reporting period. Shares of the company have gained over 150% since then.

Disclosure: None