Tidewater Inc. (NYSE:TDW)’s shares are trading more than 30% lower on the back of a disappointing fiscal fourth-quarter earnings report. For the three months ended March 31, the company posted a loss of $1.74 per common share on revenue of $184.2 million, versus a loss of $0.19 per share on sales of $324.8 million reported a year earlier. For the full fiscal year, the company reported a loss of $3.41 per common share on sales of $979.1 million, versus the previous fiscal year’s loss of $1.34 per share on sales of $1.496 billion. One reason for wider losses is that Tidewater took a $0.87 per share non-cash asset impairment charge during the fourth quarter. The company also registered a $0.18 per share foreign exchange loss related to its Angola joint venture, Sonatide. Tidewater’s internal forecast indicates that, within fiscal 2017, the company may no longer be in compliance with the minimum interest coverage ratio requirement of 3.0x that the company has with banks. In connection with this development, the company said:
“We expect the report of the company’s independent registered public accounting firm that accompanies our audited consolidated financial statements for the fiscal year ended March 31, 2016 (the “audit opinion”) will contain an explanatory paragraph regarding our ability to continue as a going concern.”
However, Tidewater is engaged in discussions with its principal noteholders and lenders to amend the company’s 3.0x minimum interest coverage ratio covenant in advance of any potential default occurring.
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With all of this in mind, let’s go over the new action surrounding Tidewater Inc. (NYSE:TDW).
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, down by one from one quarter earlier. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jim Simons’ Renaissance Technologies holds the largest position in Tidewater Inc. (NYSE:TDW). Renaissance Technologies has a $13 million position in the stock, comprising less than 0.1% of its 13F portfolio. Coming in second is East Side Capital (RR Partners), led by Steven Richman, holding a $8.1 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and Matthew Hulsizer’s PEAK6 Capital Management.
On the next page, we are going to take a look at some funds that decided to exit the stock during the first quarter. In addition, at the end of this article we will also compare TDW to other stocks including Culp, Inc. (NYSE:CFI), Eclipse Resources Corp (NYSE:ECR), and Cardionet Inc (NASDAQ:BEAT) to get a better sense of its popularity.
Since Tidewater Inc. (NYSE:TDW) has witnessed bearish sentiment from hedge fund managers, it’s safe to say that there exists a select few fund managers who were dropping their entire stakes last quarter. Interestingly, Paul Orlin and Alex Porter’s Amici Capital sold off the largest investment of the 700 funds followed by Insider Monkey, worth about $3.7 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund sold off about $1 million worth.
Let’s also examine hedge fund activity in other stocks similar to Tidewater Inc. (NYSE:TDW). We will take a look at Culp, Inc. (NYSE:CFI), Eclipse Resources Corp (NYSE:ECR), Cardionet Inc (NASDAQ:BEAT), and Karyopharm Therapeutics Inc (NASDAQ:KPTI). This group of stocks’ market valuations resemble TDW’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CFI | 9 | 31190 | -4 |
| ECR | 7 | 9237 | 1 |
| BEAT | 14 | 60282 | -3 |
| KPTI | 5 | 41794 | -3 |
As you can see these stocks had an average of nine hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $32 million in TDW’s case. Cardionet Inc (NASDAQ:BEAT) is the most popular stock in this table. On the other hand Karyopharm Therapeutics Inc (NASDAQ:KPTI) is the least popular one with only five bullish hedge fund positions. Tidewater Inc. (NYSE:TDW) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BEAT might be a better candidate to consider a long position.
Disclosure: None
