The company was down over 23% on Friday, October 26th—around $6.30—after missing quarterly estimates and offering lower guidance. There were a number of insiders who were able to cash out before the huge decline. Even though the company trades at 45x it did just sign its largest contract in history and trades at “just” 30x forward earnings. The company provides services for ensuring healthcare claims are paid correctly, and is expected to grow five-year EPS at over 25% annually. As a result, we believe that this pullback could be a buying opportunity.
The top fund owner, Columbus Circle Investors, owned nearly 930,000 shares at the end of June. Assuming the firm has not changed its position since this time, Kahn lost over $5.8 million dollars on Friday. Other notable investors like Samlyn Capital also had large positions, one that was an over 400% increase from their 1Q share count. Samlyn was the owner of over 680,000 shares, causing the firm to potentially lose around $4.3 million last week.
Verisign, Inc. (NASDAQ:VRSN) also lost its investors big money, with its market value down over 15% on Friday, October 26th, burning two tiger cubs in the process. The company reported 3Q earnings up 28% from last year but the numbers missed consensus estimates. The big overhang for the company is regarding its submission of its “.com” registry agreement to the Department of Commerce, which may not approve its renewal before the November expiration date. Credit Suisse believes there is an near-$20 valuation swing depending on how the DOC rules. This, coupled with the fact that Verisign trades at a P/S well above the other tech companies listed at 8x, compared to its industry average of 2.4x, leads us to stray away from the stock.
One fund manager who is likely to be particularly saddened by Verisign’s decline is Stephen Mandel with Lone Pine Capital. In a 13G filing in early September, the firm announced an 8.6 million-share ownership in Verisign. Based on Verisign’s decline, Lone Pine Capital may have lost as much as $62 million. In addition, John Griffin was another top shareholder, with over 6.2 million shares invested. Verisign made up over 4% of Griffin’s 2Q 13F and may have cost the firm as much as $45 million. Mandel owns around 5.5% of Verisign’s outstanding shares, and Griffin owns nearly 4%. Beyond just Mandel and Griffin, ten funds that we track had 3% of their 2Q 1Fs invested in Verisign.
Riverbed Technology, Inc. (NASDAQ:RVBD) was down 18%, over $4.00, on Wednesday, October 31st, after announcing it would acquire OPNET for $1 billion. Various insiders were able to get out before the decline. The company saw various execution issues that put the stock down 35% over the past year. Although the company trades at a 45x P/E, the forward P/E comes in at 16x and we believe that the OPNET transaction will be a long term positive and would consider the pull back a buying opportunity; check out our thoughts whether Cisco might buy Riverbed.
Cliff Asness, Polar Capital and Israel Englander all were upping their stakes in 2Q, with Asness being the top fund owner and upping his stake over 4000%. They owned over 500,000 each and may have lost at least $2 million a piece from the stock’s decline.
Fluor Corporation (NYSE:FLR) was down 10% on Friday, November 2nd on disappointing earnings and weak 2013 guidance. We believe the Chicago Bridge-Shaw Group will be the market leader for engineering and infrastructure services. Fluor will see further declines in new billings as delays in mining projects continue amidst a slowing global economy. As well, the company trades in line with its historical P/E of around 15x.
This decline was very unfortunate for the top-fund owners in Fluor, Diamond Hill Capital and Carlson Capital. Diamond owned nearly 1.2 million shares and Carlson held 720,000 at the end of 2Q. This translates into a roughly $6.6 million loss for Diamond and a $4 million loss for Carlson.
Pitney Bowes Inc. (NYSE:PBI), down 13% or $1.90 per share on Friday, November 2nd, missed gross earnings estimates. The company posted 3Q results of $0.38, compared to the same quarter last year of $0.85 and consensus of $0.48. The company is seeing tech competitors infringe on its key arena, the postal delivery product market. Pitney may appear undervalued on a P/E basis at 7x, yet we believe the company is cheap for a reason, as it is expected to see EPS decline at a 5% CAGR over the next five years.
Pitney called Coatue Management as its top fund owner, which was a new position for the company at 1.2 million shares. The potential loss for Coatue was $2.3 million, while Winton Capital Management was the second largest fund owner by shares, and may have lost as much as $1 million last week.
