It’s another calm day on Wall Street as the NASDAQ index is slightly in the green and the Dow Jois down by just half a percent.
While the broader markets may be calm, shares of five stocks, Stone Energy Corporation (NYSE:SGY), Skechers USA Inc (NYSE:SKX), Twilio Inc (NYSE:TWLO), La-Z-Boy Incorporated (NYSE:LZB), and Supreme Industries, Inc. (NYSEMKT:STS), are deep in the red. Let’s find out why traders are selling each stock and determine how the smart money investors from our database are positioned towards them.
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).
Stone Energy Corporation (NYSE:SGY) shares have fallen by 43% after the company announced entry into a comprehensive restructuring support agreement with senior noteholders. According to the press release,
“The RSA [restructuing support agreement] contemplates that the Company will file for voluntary relief under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in a United States Bankruptcy Court (the “Bankruptcy Court”) on or before December 9, 2016 to implement the Plan in accordance with the term sheet annexed to the RSA.”
The company added that “existing common stockholders of Stone will receive their pro rata share of 5% of the common stock in reorganized Stone and warrants for up to 15% of the post-petition equity exercisable upon the Company reaching certain benchmarks pursuant to the terms of the proposed new warrants.” In addition, Stone Energy has agreed to sell Appalachia assets to an affiliate of Tug Hill for $360 million in cash. Of the 749 funds we track, eight funds owned $11.1 million worth of Stone Energy Corporation (NYSE:SGY)’s stock, which accounted for 16.10% of the float on June 30, versus 15 funds and $2.62 million respectively on March 31.
Skechers USA Inc (NYSE:SKX) is 17% in the red after the company reported third-quarter EPS of $0.42 on revenue of $942.4 million, missing the consensus estimates by $0.05 and $11.98 million, respectively. Comparable store sales went up by 3% on the year and gross profit inched up by 40 basis points to 45.6%. The company’s international wholesale sales advanced by 18%, to help Skechers grow its sales overall by 10.1% year-over-year. Traders are likely selling Skechers because they were expecting more robust growth. The number of funds from our database with holdings in Skechers USA Inc (NYSE:SKX) fell by five quarter-over-quarter to 27 at the end of June.
On the next page, we will find out why Twilio, La-Z-Boy Incorporated, and Supreme Industries are deep in the red.