While crude prices are now at a monthly high and the S&P 500 is above 2,100, some stocks have been left behind. Among the stocks deep in the red today are Rambus Inc. (NASDAQ:RMBS), International Business Machines Corp. (NYSE:IBM), Brown & Brown, Inc. (NYSE:BRO), MGIC Investment Corp. (NYSE:MTG), and Myriad Genetics, Inc. (NASDAQ:MYGN). Let’s examine why investors have been selling these equities at a discount and analyze relevant hedge fund sentiment towards these stocks among the top investors tracked by Insider Monkey .
Our research 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).
Rambus Shares Down Following First Quarter Miss
Rambus Inc. (NASDAQ:RMBS) shares have retreated by 7% after the company missed revenue estimates. Although its bottom-line beat estimates by $0.01 per share with EPS of $0.13 for the first quarter, Rambus’ sales missed by $0.55 million and fell by 0.3% year-over-year to $72.7 million. Revenue fell because of lower royalty revenue, which declined by 6.1% in the quarter to $62.88 million. The company’s guidance for the second quarter was also lower-than-expected. Rambus is guiding for $72-to-$77 million in revenue versus expectations of $78.7 million. Hedge fund ownership in Rambus Inc. (NASDAQ:RMBS) is light. Eight funds out of the 785 or so funds that we track owned Rambus shares at the end of December.
IBM Shares Fall 5%
International Business Machines Corp. (NYSE:IBM) shares are 5.5% in the red in late morning trading after the company reported its first quarter earnings. Although the tech giant earned $2.35 per share on revenue of $18.68 billion, beating estimates by $0.26 per share and $400 million, respectively, the company’s gross margin dropped by 170 basis points year-over-year to 46.5%. The company’s tech services and cloud platform sales also dropped by 1.5% year-over-year and part of the bottom-line beat was due to a $1.2 billion tax benefit. Despite the uninspiring quarter, some investors will stick around. That’s partly because Warren Buffett‘s Berkshire Hathaway owned 81.03 million shares of International Business Machines Corp. (NYSE:IBM) at the end of December and continues to consider it a great long-term holding.
On the next page, we take a closer look at why Brown & Brown Inc, MGIC Investment Corp, and Myriad Genetics Inc. are all incurring declines today.