Today has not started particularly well for Rite Aid Corporation (NYSE:RAD), with the stock opening 5.64% lower after the company’s quarterly report brought disappointing news, while Peabody Energy Corporation (NYSE:BTU) has dipped into the red following some somber news of its own: that the company’s board has approved a reverse stock-split owing to its precipitous decline this year. Peabody Energy’s shares are down by over 81% year-to-date.
Rite Aid’s profits for its fiscal second quarter of 2016 suffered from losses on debt retirement and increases in depreciation expenses and capital spending following the takeover of EnvisionRx. Revenues rose by 18% year-over-year to $7.7 billion, beating estimates of $7.6 billion, while earnings per share plummeted to $0.02 from the $0.13 per share registered for the same period of last year. The stock has continued to slide by more than 10% during the first hours of trading.
Rite Aid Corporation (NYSE:RAD) cut its profit guidance for the full year to a range of $0.12-to-$0.19 and reiterated revenues expectations of $30.8 billion to $31.1 billion. One of the largest drug-store chains in the United States, Rite Aid has recently bolstered its portfolio through the addition of EnvisionRx, a pharmacy benefit management company. The acquisition cost Rite Aid roughly $2 billion, paying 90% in cash and the remaining in stock (approximately 28 million shares). Rite Aid has stated that the acquisition of EnvisionRx has already had an impact on the company’s bottom line, with same-store sales increasing by 2.8% during the reported fiscal quarter.
Some hedge fund managers that we follow chose to close their positions in Rite Aid Corporation (NYSE:RAD) during the second quarter, with the total number of hedge funds holding the stock falling to 55 from 59, while the overall value of their holdings fell to $972 million from $1.15 billion. Among the hedge fund managers that we track, Larry Robbins is the biggest fan of Rite Aid, having reported a position of 12.5 million shares as of the end of the second quarter. Having initiated this position during the first three months of 2015, Robbins reduced it by approximately 11% in the second quarter. John Burbank, on the other hand, saw fit to step up his interest in the company, having increased his holding by 178% during the second quarter. His fund, Passport Capital reported ownership of roughly 11.5 million shares in its latest 13F filing. Bank of America/Merrill Lynch initiated coverage of the stock in August, assigning a ‘Buy’ rating.
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Wall Street has not greeted the decision of Peabody Energy Corporation (NYSE:BTU)’s shareholders to undergo a reverse stock split kindly, with shares slumping by 9.49% in early afternoon trading. The decision was approved during a special shareholder meeting on Wednesday, with the 1-for-15 reverse split set to come into effect at the end of the September 30 business day. The move will see the total number of outstanding shares to decrease from about 278 million to approximately 19 million. Peabody has announced that no new shares will be issued and that shareholders with fractional shares would be compensated in cash.
“We thank our shareholders for their continued support as we work through these challenging times. Peabody is advancing further initiatives across our global platform with an intense focus on operational excellence, lean organization, portfolio management and financial strength,” said President and Chief Executive Officer Glenn Kellow.
Peabody Energy Corporation (NYSE:BTU), on the other hand, gained in popularity among the hedge funds within our database during the second quarter, with the number of investors increasing to 27 from 19, although the overall value of their stakes fell to $142 million from $226 million, which is not actually a result of funds selling shares, but due to the sheer decline of the stock, which fell by more than 55% during the second quarter. Famous activist Dmitry Balyasny is the biggest fan of the stock, as his fund Balyasny Asset Management holds a little over 18.4 million shares as of the end of the second quarter, though this was down by 33% over the quarter. Robert Pitts on the other hand, decided to enter into a long position during the quarter, amassing some 8.94 million shares, as reported in his fund’s latest 13F filing. Ken Griffin is also optimistic about the prospects of Peabody Energy, with Citadel Investment Group reporting a 14% increase in its stake to 3.09 million shares.
Disclosure: None
