Why Herbalife, Big Lots, GameStop, and Two Other Stocks Are in Spotlight Today

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.
Kinross Suspends Chile Mine Activity

Kinross Gold Corporation (USA) (NYSE:KGC) shares are in the green after the gold miner announced that it has suspended activities at its Maricunga mine, mostly due to a Chilean regulatory sanction that would have substantially reduced water pumping at the mine. Although Kinross will lay off 300 employees as a result of the suspension, the mine closing won’t affect Kinross’ 2016 production and cost guidance. Kinross will also ‘continue to explore further permitting efforts and review the operation and its mineral resource model to consider possible options for re-starting mining’. As of the end of June, 31 funds tracked by Insider Monkey own shares of Kinross Gold Corporation (USA) (NYSE:KGC), compared to 28 funds a quarter earlier.

Ulta Reports Earnings

Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) is in the spotlight today on the back of reporting better-than-expected results for the fiscal second quarter, with EPS of $1.43 on revenue of $1.07 billion, versus estimates of $1.40 and $1.06 billion, respectively. During the quarter, Ulta’s sales advanced by 21.9% year-over-year and diluted EPS increased by 24.3%, led by a 14.4% jump in comparable sales. For the full fiscal 2016, Ulta Salon, Cosmetics & Fragrance expects the company to achieve comparable sales growth of 11% to 13% (up from the previous guidance of 10% to 12%) and to deliver earnings per share growth in the low to mid-twenties percentage range (versus the previous guidance of low twenties percentage range). A total of 36 funds followed by our team owned shares of Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) at the end of the second quarter.

GameStop Dissapoints

GameStop Corp. (NYSE:GME) shares are in the red after its sales for the second quarter missed the consensus estimate by $90 million and its EPS was in-line with expectations. For the fiscal second quarter, GameStop posted earnings of $0.27 per share on revenue of $1.63 billion. Revenue fell by 7.4% year-over-year as same-store sales declined by 11%, in part due to the lack of hot video game hardware product introductions during the quarter. For the fiscal third quarter, GameStop expects EPS of $0.53 to $0.58. Between April and June, billionaire Jim Simons’ Renaissance Technologies added 1.25 million shares to its position in GameStop Corp. (NYSE:GME) and reported nearly 1.28 million shares in its latest 13F filing.

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