The shares of A Schulman Inc (NASDAQ:SHLM) have declined by 8.56% since its fiscal third quarter financial earnings release on July 6, 2015. The plastic compound maker announced a drop of 13% in its quarterly sales, with net sales of $560.9 million for the quarter. According to the company, foreign currency translation had an impact of $91 million on its earnings results for the quarter. Without taking restructuring costs and acquisition costs under consideration, the plastic company reported earnings per share of $0.72, which is lower than its same quarter earnings last year of $0.74. Wall Street expected earnings per share of $0.77 for A Schulman Inc (NASDAQ:SHLM) against revenue of $608.9 million. The firm has downgraded its earnings outlook for the year, with its present outlook dipping to a range between $2.37 to $2.42 per share against prior guidance of $2.50 to $2.55 per share. It is important to note that the plastic compound manufacturer was able to meet market expectations in its fiscal second quarter of 2015 when it posted EPS of $0.39. The high-performance plastic manufacturer announced completion of the acquisition of HGGC Citadel Plastics Holdings, Inc. (“Citadel”) on June 1, 2015 for $800 million. Citadel is a specialty engineered plastics company involved in the production of thermostat composites and industrial grade thermoplastic compounds.
The shares of A Schulman Inc (NASDAQ:SHLM) have declined by 5.88% year-to-date now following the rough week and it appears the smart money predicted the headwinds for the company. Hedge funds tracked by Insider Monkey were bearish on the outlook of the company heading into the second quarter, with 11 hedge fund managers invested in Schulman, with aggregate investments of $135.43 million. Total ownership fell heavily from 17 hedge funds, though the value of their holdings increased from $119.38 million. The increase in net investments however was entirely due to the growth in the price of the shares of the company during the first quarter, as they gained over 19%; there was actually some selling of shares given that, as hedge funds clearly weren’t being sucked in by the big quarterly gains. Schulman has since given back all of those gains and more.
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In terms of insider activity, David Birney, Director at A Schulman Inc, sold 3,000 shares of the company on March 2. We track insider activity along with the activity of the smart money as it can give us great insight into the mood a company’s executive leadership has for its own shares.
Let’s check out the latest hedge fund action encompassing A. Schulman Inc (NASDAQ:SHLM) now.
What have hedge funds been doing with A. Schulman Inc (NASDAQ:SHLM)?
Heading into the second quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a reduction of 35% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably.
Of the funds tracked by Insider Monkey, Mariko Gordon’s Daruma Asset Management had the biggest position in A. Schulman Inc (NASDAQ:SHLM), worth close to $87.1 million and consisting of 1.81 million shares. Coming in second was Royce & Associates, led by Chuck Royce, holding a $24.2 million position of 502,590 shares; the fund had 0.1% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism consist of Cliff Asness’ AQR Capital Management, Ira Unschuld’s Brant Point Investment Management, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
Because A. Schulman Inc (NASDAQ:SHLM) has experienced declining sentiment from hedge fund managers, logic holds that there was a specific group of money managers who were dropping their entire stakes heading into the second quarter. Interestingly, Ken Grossman and Glen Schneider’s SG Capital Management said goodbye to the largest investment of the 700 funds tracked by Insider Monkey, totaling about $8.6 million in stock, while Jim Simons of Renaissance Technologies was right behind this move, as the fund manager said goodbye to about $2.7 million worth of shares.
Considering the negative investor sentiment that appeared to foretell the lower-than-expected quarterly results, we do not recommend buying the shares of A Schulman Inc at this time.
Disclosure: None
