Navient Corp (NASDAQ:NAVI)‘s shares have slid by 9.59% today to $16.60 per share after the firm reduced its guidance for the full year and forecast lower-than-expected earnings for the second quarter, which it is scheduled to report next Tuesday. Core earnings per share is forecast by the company to be $0.40 per share in the second quarter. For the full 2015 fiscal year, EPS is expected to be $1.85. These are well below what analysts were expecting, as consensus estimates had earnings coming in at $0.55 per share for the second quarter and $2.19 per share for the full fiscal year. Navient says that the reduction of its earnings forecast comes as the firm cut net interest income as costs of funds burgeoned. The student loans company also said that it eliminated additional private loan acquisitions from the outlook. Navient’s year-to-date returns now stand at a loss of 23.23%, well below the returns of the credit services industry as a whole, which has returned 3.88% year-to-date according to Morningstar data.
It appears that hedge funds tracked by Insider Monkey saw this negative development coming up for Navient Corp (NASDAQ:NAVI)’s second quarter and 2015 fiscal year. By the end of March, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, down from 29 following the previous quarter. The aggregate value of holdings owned by those 25 hedge funds also decreased by 19.14% to $648.6 million by March 31. This is slightly offset by the 5.92% decline in the stock’s price in the first three months of 2015, but still a rather large capital pull out by the smart money.
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Furthermore, Insider Monkey tracks insider transactions of buying or selling of shares. This tells us whether insiders are also bullish on their firms’ shares. While there were no purchases by insiders of NAVI recorded in the first six months of the year, there have been a few sales. The most recent sale was by Executive Vice President Timothy Hynes, who sold 296 shares on May 1.
Let’s view the fresh hedge fund activity surrounding Navient Corp now.
How have hedgies been trading Navient Corp (NASDAQ:NAVI)?
According to hedge fund experts at Insider Monkey, Leon Cooperman‘s Omega Advisors had the number one position in Navient Corp (NASDAQ:NAVI), worth close to $166.3 million from a holding of 8.18 million shares, amounting to 2.7% of its total 13F portfolio. Coming in second was D.E. Shaw & Co., L.P., led by David E. Shaw, holding a $152.8 million position of 7.52 million shares; the fund had 0.2% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism consist of Cliff Asness’ AQR Capital Management, Michael Blitzer’s Kingstown Capital Management, and Patrik Brummer’s Zenit Asset Management AB.
Since Navient Corp (NASDAQ:NAVI) has witnessed bearish sentiment from the smart money, it’s safe to say that there were a few hedge funds who sold off their positions entirely by the end of the first quarter. It’s worth mentioning that Neil Chriss‘ Hutchin Hill Capital dumped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, totaling about $28.14 million and made up of 1.3 million shares. Malcolm Fairbairn’s fund, Ascend Capital, also sold off its stock, 328,716 shares in all, worth about $7.1 million.
Based on these trades made by hedge funds in the first quarter and the fact that the firm has cut its guidance for both the second quarter and the full 2015 fiscal year, we do not recommend buying Navient Corp (NASDAQ:NAVI) shares at the moment.
Disclosure: None
