These Five Stocks Are Deep in Red on Earnings and Other Developments

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Following two days of steep declines, Wall Street couldn’t recover on Wednesday morning, as most stocks have declined, while the list of losers is led by Yahoo! Inc. (NASDAQ:YHOO), National-Oilwell Varco, Inc. (NYSE:NOV), Mondelez International Inc (NASDAQ:MDLZ), Netflix, Inc. (NASDAQ:NFLX), and Match Group Inc (NASDAQ:MTCH). Let’s take a closer look at why investors are selling these stocks and what is the consensus sentiment towards them among smart money investors.

Imitating hedge funds and other institutional investors can help identify some of the most profitable stocks on the market. However, our extensive research that covered the period between 1999 and 2012, showed that the best approach is to follow these investors into their small-cap stocks. Our backtests showed that the 15 most popular small-cap stocks among hedge funds managed to generate a monthly alpha of 81 basis points, versus an alpha of 0.7 percentage points posted by their top 50 large-cap picks (see more details here).

We are going to start with Yahoo! Inc. (NASDAQ:YHOO), whose stock has plummeted by 8% on the back of the company posting its financial results for the fourth quarter and full 2015. For the quarter, Yahoo posted revenue of $1.27 billion, with earnings of $0.13 per share. Moreover, EPS came in line with expectations, while the revenue missed the consensus by $190 million. Total net loss for the quarter reached $4.435 billion and this figure includes a non-cash impairment of goodwill, in which the firm registered a loss of $4.461 billion. In addition, the company delivered a 7.6% comparable revenue growth for the full year to $4.97 billion. However, it seems that investors also disliked the company’s strategic plan, which includes eliminating 15% of its workforce, as well as five offices (Dubai, Mexico City, Buenos Aires, Madrid and Milan). This is part of a more aggressive plan which aims to improve profitability, reduce operating expenses and divest in non-strategic assets.

During the third quarter of 2015, Yahoo! Inc. (NASDAQ:YHOO) registered a decrease in popularity among the funds we track, with 89 investors holding long positions at the end of September, versus 104 funds at the end of June, and they amassed 20.1% of the float. Among them, Kenneth Mario Garschina‘s Mason Capital Management was the largest shareholder, reporting ownership of 16.36 million shares in its last 13F filing.

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Moving on, National-Oilwell Varco, Inc. (NYSE:NOV)’s shares are down by 12% today after the company reported weaker-than-expected fourth-quarter results. The company delivered fourth-quarter EPS $0.23 on revenue of $2.72 billion, missing profit estimates by $0.04 per share and revenue expectations by $320 million. Furthermore, revenue fell by 52% from the fourth quarter of 2014.

Hedge fund sentiment towards National-Oilwell Varco, Inc. (NYSE:NOV) has stayed unchanged, as the number of funds long the stock remained unchanged at 28 at the end of the third quarter. First Eagle Investment Management was the largest shareholder of National-Oilwell Varco, Inc. (NYSE:NOV), with 21.15 million shares, valued at $796.2 million at the end of September.

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Read on to see the developments that sent lower shares of Mondelez International, Netflix, and Match Group.

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