Stocks are trading down overall on Monday, as disappointing earnings, tumbling oil prices, and tension over the upcoming Federal Reserve meeting continue to cause anxiety among investors. Among the day’s decliners, we can count Koninklijke Philips NV (ADR) (NYSE:PHG), Independent Bank Corporation(MI) (NASDAQ:IBCP), Cabot Oil & Gas Corporation (NYSE:COG), Credit Suisse Group AG (ADR) (NYSE:CS), and Apple Inc. (NASDAQ:AAPL), all of which are posting losses in the early afternoon. What is driving these particular stocks down? Let’s find out. As well, we’ll take a look at what the hedge funds in our database think about the aforementioned companies.
Our research determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).
Koninklijke Philips’ Miss Is Not The Only Thing Worrying Shareholders
Let’s start with Koninklijke Philips NV (ADR) (NYSE:PHG), which is down by roughly 4.2% in Monday trading following the announcement of the company’s first quarter financial results as well as a possible IPO for its lighting unit. For the first quarter, the Netherlands-based firm posted EPS of EUR0.03 ($0.03), missing estimates by EUR0.09, on revenue of EUR5.52 billion ($6.22 billion), which came in EUR170 million ($191.65 million) ahead of the Street’s consensus. However, as mentioned above, it is not only the earnings miss that is pulling the stock down; management also indicated that it is leaning towards floating an IPO of its lighting unit, rather than selling it, as investors had expected. If the IPO takes place, the lighting unit could be valued at approximately EUR5 billion ($5.64 billion), and would leave Koninklijke Philips to focus on healthcare technology.
Among the funds that we track, ten were long Koninklijke Philips NV (ADR) (NYSE:PHG) as of the end of 2015. However, it should be noted that their combined stakes only accounted for 1.5% of the company’s outstanding shares.
Independent Bank Corporation Also Misses On Earnings
Next up is Independent Bank Corporation(MI) (NASDAQ:IBCP), which is down by 1.55% this afternoon. Before the bell rang this morning, the small-cap bank holding company posted EPS of $0.19, $0.01 below the Street’s consensus. Revenue of $19.8 million, however, beat expectations by $0.63 million.
Independent Bank Corporation(MI) (NASDAQ:IBCP) counted the support of nine hedge funds among those we track by the end of 2015. Among them, we could highlight Emanuel J. Friedman’s EJF Capital, which held 1.45 million shares, making it the largest institutional investor of record in the company.
We study the losses seen in shares of Apple and two other companies today on the next page.
Constitution Pipeline Hits A Wall
Shares of Cabot Oil & Gas Corporation (NYSE:COG) are trading down by more than 3.5% on Monday after the New York State Department of Environmental Conservation rejected a permit for the company’s proposed Constitution Pipeline, arguing that the project fails to meet the requisites to protect the water resources in its surroundings. On Monday morning, the company announced that “it remains steadfastly committed to pursuing the federally-approved energy infrastructure project.”
Cabot Oil & Gas Corporation (NYSE:COG) saw its popularity among hedge funds decline dramatically over the fourth quarter of 2015, as the number of funds long the stock fell to 22 from 32. Andreas Halvorsen’s Viking Global held 13.41 million shares as of December 31, but boosted its exposure to 30.85 million shares as of January 21.
Proxy Adviser Questions Credit Suisse’s Transparency
Another stock tumbling on Monday is Credit Suisse Group AG (ADR) (NYSE:CS). The financial services company has seen its shares fall by almost 2.7% since the market opened this morning after proxy adviser Glass Lewis recommended that the company’s stockholders reject the remuneration proposed for the company’s management team and board members. The vote will be held during the company’s yearly general meeting on April 29. According to Glass Lewis, Credit Suisse Group AG (ADR) (NYSE:CS) was not transparent enough about the termination package that former Chief Executive Brady Dougan received when he left last year.
Questioning aside, Ken Fisher seems quite bullish on the company. His firm, Fisher Asset Management, disclosed ownership of 10.06 million shares of the firm worth almost $150 million as of March 31.
Is Apple “Outdated”?
Finally, there’s Apple Inc. (NASDAQ:AAPL), which is down by about 0.4% on Monday afternoon. Among the catalysts driving the decline were comments from Jia Yueting, the billionaire CEO and chairman of Chinese conglomerate LeEco, a company that is aiming to become a new leader in consumer electronics, entertainment and transportation.
“We think the difference between us and Apple is very large,” Mr. Yueting said. “Apple is a mobile phone company focused on hardware and software… [while LeEco] is focused on the internet first, and only then on software, and finally on hardware. One of the most important reasons [for slowing sales] is that Apple’s innovation has become extremely slow,” Yueting added, classifying the tech behemoth as “obsolete”. “We believe the next generation of mobile internet will be more open, more ecosystem oriented instead of being a closed loop…Ironically, Apple’s over-dominance, lack of internet-thinking and the closed off nature of its systems, all hindered innovation in the internet mobile industry,” he concluded.
In spite of what Yueting may think, Apple Inc. (NASDAQ:AAPL) is still one of the most popular companies among hedge funds. 133 firms in our database were long the stock by the end of 2015. Very recently, Fisher Asset Management reported holding 11.31 million shares of Apple as of March 31.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned in this article.