WD-40 Company (NASDAQ:WDFC) reported an adjusted net income of $11.0 million, or $0.75 per share for its fiscal third quarter which ended May 31, up 5% from the same quarter in the prior year. Revenues were reported to be $92.5 million, down 3% compared to the prior year’s third quarter. Year-to-date total net sales were $286.2 million, a slight increase compared to the prior year fiscal period. The company is noting that foreign currency exchange headwinds have negatively impacted its “solid performance and results.” Wall Street was expecting an EPS of $0.76. On a constant currency basis, total net sales would have been $96.5 million for the third quarter, the lubricants company revealed.
WD-40 Company (NASDAQ:WDFC) also reported that its gross margin increased to 53.3% in the third quarter compared to 51.4% in the third quarter last year, and advertising and sales promotion expenses were down by 15% in said quarter to $5.5 million compared to the fiscal third quarter of 2014. It has also revised its outlook for the full 2015 fiscal year, with net sales growth expected to be between flat and 2%, and net sales expected to be between $383 million and $390 million. Net income is projected to be between $44.5 million and $45.4 million, the firm announced, while expected diluted earnings per share was pegged to be between $3.03 and $3.09. The bottom line miss coincides with WD-40 Company (NASDAQ:WDFC) witnessing a decrease in the number of hedge funds tracked by Insider Monkey which had long positions in the stock by the end of the first quarter.
On March 31, a total of eight of the hedge funds tracked by Insider Monkey were long in this stock, an 11% decrease from one quarter earlier. Total value of holdings, however, increased 9.44% to $56.8 million by the end of said period from $51.9 million in the preceding quarter. The stock grew only 4.07% in the first three months of the year, indicating some net buying of the company’s shares by the smart money.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 135% and beating the market by more than 80 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
As for insider transactions, which we also track to tell whether executives at companies are also investing in their firms’ stock, there were no share purchases made by insiders of WD-40 Company this year. There have been regular share sales, however, by directors and other officers. The most recent sale was by Director Richard Collato on June 18, of 3,500 shares. President and CEO Garry Ridge also sold 3,564 and 6,706 shares on June 16 and 17 respectively. Keeping this in mind, let’s analyze the recent smart money action regarding WD-40 Company on the next page.
How are hedge funds trading WD-40 Company (NASDAQ:WDFC)?
According to hedge fund intelligence website Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in WD-40 Company (NASDAQ:WDFC). Renaissance Technologies has a $46.8 million position of 528,700 shares of the firm, comprising 0.1% of its 13F portfolio. Sitting in the number two spot is Value Holdings LP, managed by Tim Curro, which held a $2.8 million position of 31,393 shares of the company; 1.8% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions contain Cliff Asness’ AQR Capital Management, Chuck Royce’s Royce & Associates, and John Overdeck and David Siegel’s Two Sigma Advisors.
Because fewer hedge funds among those we track had a long position in WD-40 Company (NASDAQ:WDFC) by the end of the first quarter, it’s easy to see that there is a sect of funds who were dropping their entire stakes during the first quarter. It’s worth mentioning that Peter Muller‘s PDT Partners cut the largest investment of the “upper crust” of funds followed by Insider Monkey, 5,111 shares worth about $435,000. Gavin Saitowitz and Cisco J. del Valle of Springbok Capital were right behind this move, as the fund managers said goodbye to 500 shares worth about $43,000.
Since total value of holdings of hedge funds tracked by Insider Monkey actually increased by the end of the first quarter signifying that those long in the stock are more confident in it, along with the improving outlook of the company, it appears that WD-40 Company (NASDAQ:WDFC) is a good stock to buy at the moment.