Whole Foods Market, Inc. (NASDAQ:WFM) continues its 2015 swoon from a once-exorbitant valuation, with the stock down by nearly 12% in trading today following poor earnings results for the second quarter and lowered guidance for the full 2015 fiscal year released last night. Whole Foods announced earnings per share of $0.43 on revenue of $3.63 billion for the quarter, both of which came in below analysts estimates of $0.45 and $3.70 billion respectively. The company also lowered its growth guidance for established locations to the low single-digits, from previously estimating a range between low-to-mid single-digit growth. Even more worrisome for upcoming quarters is the severe drop-off in sales that the company has witnessed following the overcharging scandal that engulfed it earlier this year. New York City’s Department of Consumer Affairs alleged that the company was overstating the weight of packaged products like chicken tenders and vegetable platters. Established store sales sank to just a 0.4% increase to close out the quarter following the scandal, from a 2.6% increase before it came to light. Things have not improved much thus far in the third quarter, with sales up by just 0.6%. Shares have now tumbled by about 35% since their 52-week high was hit in February, and are down by 28.58% year-to-date.
Hedge funds appear to have been caught up in the hype and didn’t time their exits properly. At first quarter’s end, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase from five from a quarter earlier. Their aggregate holdings also increased by nearly 4% to $644 million, while the stock rose by about 3% during the quarter, meaning hedge funds slightly added to their positions collectively. Shares have crashed since then.
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Insiders are also not showing much faith in their company, having made over 50 sales this year, and not a single purchase. CEO Walter Robb has been in the midst of the selling, shipping off over 18,000 shares this year, at prices near to their 52-week high.
With all of this in mind, we’re going to take a peek at the latest hedge fund action surrounding Whole Foods Market, Inc. (NASDAQ:WFM).
How have hedgies been trading Whole Foods Market, Inc. (NASDAQ:WFM)?
According to hedge fund experts at Insider Monkey, D E Shaw, managed by David E. Shaw, holds the biggest position in Whole Foods Market, Inc. (NASDAQ:WFM). D E Shaw has a $72.1 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting in the second spot is Israel Englander of Millennium Management, with a $52.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish consist of James Crichton’s Hitchwood Capital Management, Steve Cohen‘s Point72 Asset Management, and Edmond M. Safra’s EMS Capital.
As overall hedge fund ownership has grown, several funds have been leading the charge. Donald Chiboucis’ Columbus Circle Investors opened the largest new position in the stock during the quarter, while Matthew Tewksburyt’s Steven Capital Management and Peter Muller’s PDT Partners also opened large new positions.
Until we see consumer sentiment begin to reverse for Whole Foods Market, Inc. (NASDAQ:WFM), we can’t recommend buying it, and believe it’s drop is partly a correction from a previously lofty valuation.
Disclosure: None
