Markets slipped on Wednesday amid a report depicting a weakening economy of China. Some of the stocks which investors are watching closely today are Under Armour Inc (NYSE:UA), MGM Resorts International (NYSE:MGM), Boyd Gaming Corporation (NYSE:BYD), salesforce.com, inc. (NYSE:CRM) and Demandware Inc (NYSE:DWRE). Let’s analyze why these stocks are making moves today and see what hedge funds think of them.
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 more details here).
Under Armour Cuts Its Estimates Amid Sports Authority Bankruptcy
Shares of Under Armour Inc (NYSE:UA) fell by more than 5% today after the company slashed its revenue guidance for the full year, citing the closure of Sports Authority stores. Sports Authority filed for Chapter 11 bankruptcy protection back in March. In a statement on Tuesday, the Baltimore based sports and clothing company said that it expects its 2016 revenue at $4.925 billion, down from an earlier estimate of $5 billion and analysts’ estimates of $5.02 billion. Under Armour expects to take an impairment charge of about $23 million related to Sports Authority’s bankruptcy this quarter. The company only earned $43 million in revenues from Sports Authority this year, much less than the expected $163 million. Out of the nearly 766 funds tracked by Insider Monkey, 21 funds were positioned in Under Armour Inc (NYSE:UA) as of the end of the first quarter of 2016. Columbus Circle Investors owns 763,538 shares of the company.
On the next page, we will discuss MGM Resorts, Salesforce and Demandware.
MGM Resorts Buying 50% Stake in Borgata Hotel
MGM Resorts International (NYSE:MGM) is buying 50% in Atlantic City’s Borgata Hotel Casino & Spa from its partner Boyd Gaming Corporation (NYSE:BYD) for $900 million. According to the deal, MGM will sell its Borgata’s real estate to the MGM Growth Properties (MGP) real estate investment trust, for $1.175 billion in a sale-and-leaseback agreement. In a statement, MGM Resorts International’s CEO Jim Murren said that Borgata has outperformed despite of the tough market conditions. The deal is expected to be closed in the third quarter. A total of 55 hedge funds from our system were bullish on MGM Resorts International (NYSE:MGM) as of the end of March. Daniel S. Och’s OZ Management is a notable shareholder of the company among these hedge funds with more than 17 million shares.
Salesforce Acquires eCommerce Cloud Company Demandware
salesforce.com, inc. (NYSE:CRM) has announced that it is going to acquire Cloud-based eCommerce services provider Demandware Inc (NYSE:DWRE) for $2.8 billion. The deal is a bid to expand its hold on the Cloud eCommerce market as it tries to compete with giants like Oracle and SAP. In a statement, Saleforce’s CEO Marc Benioff said that Demandware is an “amazing” company which will help Salesforce to deliver the future of commerce as part of its existing platform and will also create another billion dollar Cloud business. Demandware Inc (NYSE:DWRE) skyrocketed by more than 55% after the news whereas Salesforce slipped 0.72%. As of the end of March 2016, 63 hedge funds had stakes in salesforce.com, inc. (NYSE:CRM), worth approximately $1.7 billion. Christopher Lord’s Criterion Capital owns more than 2 million shares of the company. On the other hand, Brian Ashford-Russell and Tim Woolley’s Polar Capital has 405,632 shares of Demandware Inc (NYSE:DWRE) as of the end of the first quarter. It is one of the 11 hedge funds from our system with positions in the Massachusetts based Cloud company.