Here’s What You Should Know about These Stocks in Spotlight Today

On the last day of the trading week, shares of J C Penney Company Inc (NYSE:JCP), Nordstrom, Inc. (NYSE:JWN), Dillard’s, Inc. (NYSE:DDS), Honda Motor Co Ltd (ADR) (NYSE:HMC), and Allergan plc Ordinary Shares (NYSE:AGN) are on the move due to various reasons. Given that sharp movement can sometimes be an indicator of future trends, let’s uncover why traders are buying or selling each stock. Let’s also see how the smart money investors positioned themselves towards these companies.

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

J C Penney Falls on Weak Sales

The turnaround of J C Penney Company Inc (NYSE:JCP) will apparently take longer than expected as sales of the retailer continue to decline. In its first quarter, J C Penney lost $0.32 per share on revenue of $2.81 billion, versus estimates of a loss of $0.38 per share on sales of $2.92 billion. Sales declined 1.7% year-over-year as comp sales inched lower by 0.4% year-over-year. Guidance is more positive, but still below market expectations. J C Penney’s management forecasts full year comp sales to rise 3% to 4% year-over-year and adjusted EPS to be positive. Full year gross margin is expected to grow just 10 to 30 basis points. J C Penney Company Inc (NYSE:JCP) shares are off 3.4% so far in early morning trading. Jim Simons’ Renaissance Technologies owned almost 18 million shares of J C Penney at the end of December.

Nordstrom Plunges Due to Earnings Miss 

Nordstrom, Inc. (NYSE:JWN) is 14% in the red this morning after the retailer reported earnings of $0.26 per share on revenue of $3.25 billion, missing estimates by $0.20 per share and $30 million, respectively. Comparable sales declined 1.7% year-over-year as demand for luxury clothes was apparently soft. As for guidance, the weak demand picture doesn’t seem like it will improve this year, with management expecting full year comparable sales growth to be in the range of -1% to +1% versus their previous guidance of +3.5% to +5.5%. Management also cut their full year EPS guidance to $2.50-$2.70 from the previous $3.10-$3.35. Some hedge funds may have seen the bearish news coming. A total of 29 funds from our database reported stakes in Nordstrom, Inc. (NYSE:JWN) worth $208.55 million (representing 2.30% of the float) at the end of December, versus 38 funds a quarter earlier.

On the next page, we examine Dillard’s Inc, Honda Motor Co Ltd (ADR), and Allergan plc Ordinary Shares.