Hedge Funds Regret Selling These Stocks in Q4

#3 Alere Inc (NYSE:ALR)

– Investors with Long Positions (as of December 31): 30

– Aggregate Value of Investors’ Holdings (as of December 31): $1.06 billion

Medical diagnostics company Alere Inc (NYSE:ALR) saw its shares skyrocket in early February after Abbott Laboratories (NYSE:ABT) announced that it will acquire the former for $5.8 billion or $56 per share. Following this announcement, several investors raised concerns that Abbott Laboratories is paying too much for Alere Inc (NYSE:ALR), considering the latter’s flat earnings growth and poor net profit margins. However, their concerns were put to rest by Abbott Laboratories’ CEO, who explained that though Alere might be not worth that much to any other buyer, Abbott has an asymmetric advantage in buying it and hence the price it is paying is justified. During the October-to-December period, the ownership of Alere among funds covered by us declined by nine and the aggregate value of their holdings in it also slid by $288 million. Among the funds which boosted its stake in Alere during the fourth quarter was D.E. Shaw, founded by billionaire David E. Shaw, which increased its holding by 20% to 1.12 million shares.

#2 Groupon Inc (NASDAQ:GRPN)

– Investors with Long Positions (as of December 31): 20

– Aggregate Value of Investors’ Holdings (as of December 31): $103.3 million

Two back-to-back positive developments in February have caused Groupon Inc (NASDAQ:GRPN)’s stock to soar by 55% so far this year. First, the company managed to beat analysts’ fourth quarter expectations of a loss of $0.05 per share on revenue of $846.59 million by declaring EPS of $0.04 on revenue of $917.17 million. A day after that, Alibaba Group Holding Ltd (NYSE:BABA) revealed in a regulatory filing that at the end of December it owned 5.6% of the outstanding shares of Groupon Inc (NASDAQ:GRPN). Following this revelation, the Street has been rife with speculation that Alibaba will acquire the company soon to expand its footprint in the U.S. The 22 prominent analysts who cover Groupon’s stock currently have an average rating of ‘Hold’ on it with an average price target of $3.68, which represents a potential downside of 22.7% from the stock’s current price. Alexander Tamas‘ Vy Capital was one of the hedge funds that initiated a stake in the company during the fourth quarter, however there were six fewer investors with long positions in the stock by the end of the fourth quarter.

#1 J C Penney Company Inc (NYSE:JCP)

– Investors with Long Positions (as of December 31): 27

– Aggregate Value of Investors’ Holdings (as of December 31): $272.6 million

J C Penney Company Inc (NYSE:JCP) is another retail company that has made it on to this list, as the sector is one of the few that is enjoying a strong 2016. The number of investors covered by us who were long the stock declined by eight during the fourth quarter, while the aggregate value of their holdings in it decreased by 35.7%. Due to continued improvements in its operational efficiency, the company reported spectacular fourth quarter numbers and issued upbeat guidance for fiscal year 2016 recently. That led its shares to break their 52-week high and they now trade with year-to-date gains of nearly 69%. Prior to the earnings release, the consensus among analysts was for the company to report EPS of $0.23 on revenue of $3.99 billion. However, J C Penney Company Inc (NYSE:JCP) blew their earnings estimates out of the water by declaring EPS of $0.40 on revenue of $4.00 billion. On March 3, analysts at Evercore ISI upgraded the stock to ‘Buy’ from ‘Hold’ and also raised their price target on it to $15 from $8. Billionaire Jim Simons of Renaissance Technologies increased its stake in the company by 23% to almost 18.00 million shares during the fourth quarter.

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