With markets in the green on Tuesday, four stocks are making big downward moves on the back of different developments. American International Group Inc (NYSE:AIG) is extending its losses on the back of its financial results, and Textainer Group Holdings Limited (NYSE:TGH), Martin Marietta Materials, Inc. (NYSE:MLM), and Demandware Inc (NYSE:DWRE) are also down on the back of weak third quarter earnings. Let’s take a closer look at the developments that sent these stocks lower today and see if the smart money sentiment agrees with today’s trends.
We assess the hedge fund sentiment towards stocks by analyzing the equity portfolios of over 700 investors that we track as part of our small-cap strategy. Through extensive analysis, we determined that by imitating the most popular small-cap picks among these funds, we can beat the market by double digits each year. Our strategy involves identifying the 15 most popular small-cap ideas of the funds from our database and it has returned 102% since August 2012, beating the S&P 500 ETF (SPY) by some 53 percentage points (see more details here).
American International Group Inc (NYSE:AIG)‘s stock opened nearly 5% lower and has stayed at the same level throughout the day. The company posted EPS of $0.52, well below the $1.03 expected by analysts (see more details here). CEO Peter Hancock also rebuffed the suggestion by activists Carl Icahn and John Paulson that the company should break up. Today’s drop probably made the stock more attractive to investors, since AIG is one of the best companies to hold for the long-term. Recently, Omega Advisors, a hedge fund managed by notorious value investor Leon Cooperman, reaffirmed American International Group Inc (NYSE:AIG) as one of its top picks and set a 10% growth rate for the company for the next three-to-five years (see article).
Textainer Group Holdings Limited (NYSE:TGH)‘s stock also opened lower and has further extended its losses to over 20% in intraday trading. The company delivered revenues of $135.59 million for the third quarter, down by 6% on the year, and earnings of $0.31 per share, a decline of 64% compared to the same period of last year. Both revenues and earnings also missed analyst estimates of $138.2 million in revenue and $0.66 in EPS. In addition, amid a lower demand for shipping containers, Textainer Group Holdings Limited also lowered its outlook for the next two years and cut its dividend to $0.24 from $0.47. Most investors from our database don’t see any profit-making opportunities in Textainer Group Holdings Limited (NYSE:TGH), as only eight funds held stakes equal to just 0.40% of the company’s outstanding stock at the end of June.
On the next page, we will look at what sparked the declines of the other two stocks, Martin Marietta Materials, Inc. (NYSE:MLM) and Demandware Inc (NYSE:DWRE).