Here’s Why Investors Are Bailing On These Four Stocks Today

At a time when all three indexes are firmly in the green, shares of Navios Maritime Partners L.P. (NYSE:NMM), Fidelity National Information Services (NYSE:FIS), TASER International, Inc. (NASDAQ:TASR), and Archer Daniels Midland Company (NYSE:ADM) are down substantially. Let’s take a closer look at the downside catalysts and analyze what the world’s greatest investors think of each stock.

Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by more than 53 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. a 48.7% gain for the S&P 500 Index (see the details here). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).

Shares of dry bulk shipper Navios Maritime Partners L.P. (NYSE:NMM) are off by 16.53% after the company reported third quarter earnings per share of $0.13 on revenues of $57.1 million, missing estimates by $0.04 per share and $3.05 million, respectively. Because China’s economy isn’t as strong as before, dry bulk commodity demand is lower than expected and dampening demand for Navios Maritime Partners’ services. To adjust to the challenging and uncertain times, Navios’ management is cutting the quarterly distribution to $0.2125 per unit, down from $0.44 per unit a quarter earlier. China’s economy needs to pick up for the stock to do well. Hedge funds are cold towards Navios Maritime Partners L.P. (NYSE:NMM), as just six funds of the 730 elite funds that we track owned $8.96 million of the company’s shares, just 1.00% of the float on June 30.

Fidelity National Information Services (NYSE:FIS) is down by 11.74% after reporting third quarter earnings of $0.90 per share on revenues of $1.58 billion. The results missed estimates of $0.91 per share in earnings and $1.64 billion in revenues. Earnings were less than expected because the strong dollar and challenging macro-economic conditions weighed on results. Revenue from the company’s integrated financial solutions division inched up by 1% to $971 million, while sales from the company’s global financial solutions segment declined by 5% to $609 million. 34 funds we track owned $1.23 billion of Fidelity National Information Services (NYSE:FIS)’s shares on June 30, with William Von Mueffling‘s Cantillon Capital Management holding 8.08 million shares.

On the next page, we examine why TASER and Archer Daniels Midland Company are falling.
TASER International, Inc. (NASDAQ:TASR) shares fell 13.65% after the police equipment company reported third quarter earnings of $0.03 per share on revenues of $50.7 million, widely missing profit estimates, by $0.06 per share, despite beating revenue expectations by $3.49 million. Revenue from the company’s Taser Weapons division fell by 1.2% year-over-year while revenue from the company’s Axon cameras jumped by 150.2% year-over-year. Evidence.com and Axon bookings rose by 141% year-over-year to $36.9 million. Given the company’s high forward P/E, investors hoped for stronger growth numbers that TASER couldn’t meet this quarter. New products and more international sales would help with that growth. 18 funds reported TASER stakes worth $130.88 million at the end of June, good for 7.4% of the stock’s float. Peter Rathjens, Bruce Clarke and John Campbell‘s Arrowstreet Capital owned 1.03 million TASER shares at the end of the second quarter.

Lastly, Archer Daniels Midland Company (NYSE:ADM) is down by 8.23% after the company reported third quarter earnings of $0.60 per share on revenues of $16.57 billion, missing estimates by $0.10 per share and $1.2 billion, respectively. Earnings missed expectations because of the strong dollar and increased crop supplies, particularly in South America. Hedge funds aren’t overly excited about Archer Daniels Midland Company (NYSE:ADM), as 33 funds reported stakes worth $867.05 million, accounting for just 2.90% of the float at the end of June. Cliff Asness‘ AQR Capital Management is a leading shareholder, with a stake of 7.77 million shares at the end of the second quarter.

Although shares are off by 18% year-to-date, we’re big fans of Archer Daniels Midland Company and think the stock is a good long-term holding. The company trades at a low forward P/E of 13.7 and has a wide moat. The third quarter’s negative conditions are not structural headwinds and will abate. Meanwhile, the stock pays a nice 2.4% dividend yield.

Disclosure: None