Why Are These Stocks Making Big Friday Moves?

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With the markets getting squashed yet again as crude breaks below $30 per barrel and the VIX threatens to rally, Textura Corp (NYSE:TXTR), Resource Capital Corp. (NYSE:RSO), Qiwi PLC (NASDAQ:QIWI), and Digital Ally, Inc. (NASDAQ:DGLY) are among today’s most volatile equities. In this article, we will examine the catalysts causing investors to buy and sell these stocks and check out how hedge funds have been trading them according to the latest available data.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. 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).

Textura Corp (NYSE:TXTR) is almost 18% lower after analysts at Benchmark Co. downgraded the stock to ‘Sell’ from ‘Buy’. Adding to today’s selling pressure is the fact that the NASDAQ index is off by more than 3.33% in afternoon trading as many investors go into ‘risk off’ mode. There wasn’t any panic among the smart money crowd during the likewise-turbulent third quarter however, as hedge fund sentiment around Textura Corp (NYSE:TXTR) was constant. The number of elite funds long the company remained unchanged at six quarter-over-quarter as of September 30. Among the top shareholders was Cliff Asness‘ quant fund AQR Capital Management, which owned 8,410 shares at the end of September.

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Resource Capital Corp. (NYSE:RSO), an REIT focused on underwriting, originating, and investing in transitional commercial real estate mortgage loans, is deep in the red today as negative sentiment causes traders to sell. Given the dividend yield of over 17%, some investors don’t think Resource Capital Corp. (NYSE:RSO)’s payout is sustainable and are heading toward the exits as a precaution. The REIT already trimmed its quarterly dividend last quarter, to $0.42 from the previous $0.64.

According to our system data, hedge funds were bearish on Resource Capital in the third quarter. A total of seven funds reported stakes worth $7.72 million (representing 2.10% of the float) in the stock as of the end of September, down from 11 funds with $9.42 million in shares at the end of June.

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On the next page we examine the latest news and action concerning Qiwi PLC and Digital Ally Inc.

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