Here’s Why These Five Stocks Are Trending Today

It’s another quiet day on Wall Street as all three major indexes are moderately lower. Although crude futures have just passed through the $50 per barrel mark, the price action around the commodity has been muted so far.

Among the stocks in the spotlight today are Walt Disney Co (NYSE:DIS), Monster Worldwide, Inc. (NYSE:MWW), L Brands Inc (NYSE:LB), BlackBerry Ltd (NASDAQ:BBRY), and Fred’s, Inc. (NASDAQ:FRED). Let’s analyze why each stock is trending and see what the smart money thinks of each of them.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 740 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

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Walt Disney Co (NYSE:DIS) is trending after Recode reported that the entertainment giant won’t bid for Twitter Inc (NYSE:TWTR). Some thought that Disney might be interested in the social media company as a distribution platform for digital content to hedge against the secular decline of the company’s crown jewel, ESPN. Evidently, those traits weren’t enough to persuade Disney to make a bid. Ken Fisher’s Fisher Asset Management reported a long stake of 8.67 million shares in Walt Disney Co (NYSE:DIS) held as of the end of June.

Monster Worldwide, Inc. (NYSE:MWW) is in the spotlight today after the company announced preliminary revenue for the third quarter of 2016. For the three months, Monster Worldwide expects revenue from continuing operations to be down by around 14% year-over-year to $143-$145 million. Fortunately for shareholders, Monster entered into a definitive agreement with Randstad on August 9, in which Randstad will buy Monster for $3.40 in cash per share. Of the 749 funds we track, 19 funds held roughly 5% of Monster Worldwide, Inc. (NYSE:MWW)’s float on June 30.

On the next page, we take a closer look at L Brands Inc (NYSE:LB), BlackBerry Ltd (NASDAQ:BBRY), and Fred’s, Inc. (NASDAQ:FRED).
L Brands Inc (NYSE:LB) shares are in the green after the retailer reported solid September 2016 sales. For the five weeks ended October 1, the company posted net sales of $971.4 million, up by 6% year-over-year. Comparable sales for the corresponding time period inched up by 3%. Shares of L Brands are down by around 22% year-to-date. A total of 29 funds from our database owned shares of L Brands Inc (NYSE:LB) at the end of the second quarter, down by nine funds from the previous quarter.

Although it may be outsourcing the development of its smartphones, BlackBerry Ltd (NASDAQ:BBRY) will nevertheless try to compete in the industry. Alex Thurber, senior VP for Global Device Sales, told BBC that the company will launch a new smartphone with a physical keyboard within six months. Due to the intense competition in the category, BlackBerry has struggled to turn a profit making smartphone in recent years. Despite the sea of red, management thinks there is still demand for BlackBerry phones and that the company could eventually succeed if it made the right product. The number of funds tracked by us with holdings in BlackBerry Ltd (NASDAQ:BBRY) fell by four quarter-over-quarter to 20 at the end of June.

Last but not least, traders are watching Fred’s, Inc. (NASDAQ:FRED) after the company reported its sales results for September. Fred’s total sales decreased by 5.5% to $199.9 million while its comparable store sales inched lower by 4.9% year-over-year. CEO Michael Bloom said:

“September sales faced a tough year-over-year comparison. The front store also experienced calendar shifts for federal assistance payments, continued substantial reductions in SNAP payments, and an increased impact related to competitive pricing strategies, particularly in consumables categories.”

Just five funds tracked by Insider Monkey were long Fred’s, Inc. (NASDAQ:FRED) at the end of the second quarter, down by one from the previous quarter.

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