With investors more afraid than ever before about the market’s prospects for 2016, shares of Cal-Maine Foods Inc (NASDAQ:CALM), Progress Software Corporation (NASDAQ:PRGS), Performance Sports Group Ltd (NYSE:PSG), and Textainer Group Holdings Limited (NYSE:TGH) are each on the move. Let’s take a closer look at the underlying reasons causing the buying and selling in these stocks and see what the world’s smartest investors think of each company.
While there are many metrics that investors can assess in the investment process, the hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details here).
Cal-Maine Foods Inc (NASDAQ:CALM) is 7.3% in the green today after the USDA reported the first bird flu case since June of last year. Although no egg-laying hens have been affected by the virus, traders are speculating that the probability of another epidemic is greater than before. Egg producer Cal-Maine Foods Inc (NASDAQ:CALM) benefited enormously from the previous bird flu strain, which sent egg prices soaring and Cal-Maine’s EPS higher. Given that 61% of Cal-Maine’s float is short, short covering likely had something to do with today’s rally in the face of the news.
25 elite funds in our system owned 13.3% of Cal-Maine’s shares at the end of September. That was up by three funds from the end of the second quarter.
Progress Software Corporation (NASDAQ:PRGS) is trending higher as well, by 4% today, as traders purchase the company’s stock after Reuters published an article yesterday stating that Progress is considering selling itself as part of its exploration of strategic alternatives. Progress Software Corp is working with JPMorgan Chase and has spoken to several private equity firms regarding the decision. Although Progress Software is making an effort to sell itself, there is no certainty that any deal will be completed given the shaky debt markets, however.
A sale would certainly make the 13 elite funds tracked by Insider Monkey that held Progress Software Corporation (NASDAQ:PRGS) at the end of September a little happier, however. Those 13 funds held 4.60% of the float.
On the next page we see the dark side of today’s markets as we study the activity in Performance Sports Group Ltd and Textainer Group Holdings Limited.
Performance Sports Group Ltd (NYSE:PSG) shares have fallen by 12% this afternoon as negative sentiment pervades the small-cap sector. Although Performance Sports Group Ltd (NYSE:PSG)’s former chairman Graeme Roustan is reportedly looking to take the company private, traders can’t shake off the company’s disappointing second-quarter, in which Performance Sports Group missed EPS estimates by $0.01 and revenue expectations by $14.48 million. The company’s outlook is also a bit lower than expected. Chief Executive Officer Kevin Davis said:
“Given the continued weakening of the Canadian dollar since our last stated guidance, we are revising our fiscal 2016 guidance and now expect Adjusted Net Income to range between $0.66 and $0.69 per share. Additionally, we expect Adjusted EPS to range between $0.09 and $0.10 in our fiscal 2016 third quarter and between $0.31 and $0.33 in our fourth quarter.”
Hurting matters further is the fact that crude prices are almost 6% lower today. Since Performance Sports gets a substantial amount of its revenue from Canada and Canada’s dollar depends in part on crude oil prices, investors are speculating that today’s falling prices will lower Performance Sports US$ earnings in the future. The Canadian dollar has lost nearly 5% against the U.S dollar since just the start of this year. The number of elite funds with holdings in Performance Sports Group remained unchanged quarter-over-quarter at 11 as of September 30.
It’s been a Friday to forget for Textainer Group Holdings Limited (NYSE:TGH) shareholders, as the value of Textainer shares has plunged by 15% in afternoon trading. Textainer Group Holdings Limited (NYSE:TGH) is one of the world’s largest lessors of intermodal containers based on fleet size in the world and the company’s fundamentals depend on a healthy global economy. Given today’s massive 451 point plunge in the Dow Jones, the future health of the global economy isn’t as assured as it was before and some investors are cutting their exposure to highly economically-sensitive stocks as a precaution.
Jim Simons‘ Renaissance Technologies was one of the seven elite funds in our system holding shares of Textainer at the end of the third quarter.