It’s a relatively quiet day on Wall Street, with the three major indexes roughly flat on the day. The Dow is down by just 15 points while the S&P is less than one-tenth of a percentage point lower. Although broader market volatility is low, CARBO Ceramics Inc. (NYSE:CRR), LSI Industries, Inc. (NASDAQ:LYTS), Alliance Data Systems Corporation (NYSE:ADS), Dana Holding Corporation (NYSE:DAN), and LendingClub Corp (NYSE:LC) are all trending sharply lower. Let’s find out what is going on with these falling stocks and see how hedge funds were positioned in them as of December 31.
Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).
CARBO Off Due to Idle Plants
CARBO Ceramics Inc. (NYSE:CRR) is off by 11% this morning after the company announced that it will idle the majority of production at its New Iberia, Louisiana plant, as well as the production at its facility in Toomsboro, Georgia. The company is idling production as a direct response to the low oil prices, which lowers demand for ceramic proppant. Investors are taking today’s news as a sign that the company’s earnings results might be weak. 11 funds in our system owned 9.7% of CARBO Ceramics Inc. (NYSE:CRR) shares at the end of 2015.
LSI Industries Down on Earnings
LSI Industries, Inc. (NASDAQ:LYTS) shares have retreated by 9.6% after the company reported earnings of $0.02 per share on revenue of $70.74 million for the third quarter of fiscal year 2016, which appears to have disappointed investors. Management is trying to make the company leaner by increasing efficiency and cutting costs where it can. CEO Dennis W. Wells expounded on this in a press release revealing the results:
“I am pleased that LSI was profitable in the third quarter, our seasonally weakest period of the fiscal year. However, it should have been much better. The substantial and continuous progress we have made in improving operating margins was blunted during the third quarter by the need to book an additional $1.0 million of warranty expense. This issue is being thoroughly investigated and resulted primarily from problems with LED drivers. We no longer sell the problem drivers, and we have targeted reducing our level of warranty claims as a high priority objective.”
Jim Simons‘ Renaissance Technologies was among 12 funds that we track in our database of 786 savvy investors which owned LSI Industries, Inc. (NASDAQ:LYTS) at the end of the fourth quarter.
On the next page we examine why Alliance Data Systems Corporation, Dana Holding Corporation, and LendingClub Corp are sliding today.