The markets are quiet today as traders brace for the latest news from the Federal Reserve’s annual Jackson Hole meeting. The major indexes opened higher, but any sort of unexpected policy change regarding interest rates can send prices soaring or plunging in an instant.
Among the stocks in the spotlight on Friday are Big Lots, Inc. (NYSE:BIG), Herbalife Ltd. (NYSE:HLF), Kinross Gold Corporation (USA) (NYSE:KGC), Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA), and GameStop Corp. (NYSE:GME). Let’s examine why traders are talking about each stock and see how the funds from our database are positioned towards them.
At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).
Big Lots Reports Mixed Earnings
Although the U.S. economy is strong, Big Lots, Inc. (NYSE:BIG) reported mixed earnings for its fiscal second quarter, beating EPS estimates, but missing the top-line expectations. During the quarter ended July 30, Big Lots earned $0.52 per share, versus estimates of $0.46 per share. Revenue was $1.2 billion, missing the consensus estimate by $20 million. Sales were down by 0.8% on the year, as comparable-store sales inched up by only 0.3%. For the full fiscal year, the company’s management sees comparable store sales rising anywhere between 1.0% and 2.0% and adjusted EPS coming in at $3.45 to $3.55. Of the around 750 funds we track, 26 funds owned shares of Big Lots, Inc. (NYSE:BIG) at the end of June, up by six funds from the previous quarter.
Icahn Purportedly Considered Cutting Herbalife Stake
According to Wall Street Journal, billionaire Carl Icahn’s Icahn Capital LP considered selling its Herbalife Ltd. (NYSE:HLF) position to an investor group that included Bill Ackman, who is famously short the stock. According to the latest SEC filings, Icahn currently owns around 18% of Herbalife and the investor has been long Herbalife since 2013, having made a good return on the position. Given the frothy valuations in the market and the number of macro risk factors, Icahn hasn’t been bullish on the market as a whole, and the activist investor could be looking to reduce his position in Herbalife to cut his overall exposure to the market. It seems that some smart money funds share Icahn’s position, as the number of investors from our database with holdings in Herbalife Ltd. (NYSE:HLF) fell by two quarter-over-quarter to 35 at the end of June.
On the next page, we find out why Kinross Gold Corporation, Ulta Salon Cosmetics & Fragrance, and GameStop Corp are trending.