Why Pandora Media Inc (P) Shares Fell

Pandora Media Inc (NYSE:P) shares retreated almost 3% on Thursday after the New York Post reported that the music streamer has been in talks with PE firms KKR, Silver Lake, Providence Equity Partners, and others to raise cash (according to the Post’s sources). Pandora is considering raising capital in part to pay substantial music royalties to various music labels and in part to expand its offerings. If Pandora Media Inc (NYSE:P) were to raise money, it would presumably raise it at a discount to current market prices, hence why some traders may have sold today. In addition, Pandora has been talking with various labels about a potential equity stake. Given that many of the labels own rival Spotify, some may be a little reluctant.

Pandora considering raising cash does not preclude a sale, however. According to the Post, its sources say the ‘door is still open and talks about a strategic investment are happening in tandem’.

What Does The Smart Money Sentiment Say?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

The smart money was bullish on Pandora in the fourth quarter. According to our records, 58 elite funds (out of the 742 top funds we track) owned $1.47 billion of Pandora Media Inc (NYSE:P) and accounted for 48.40% of the float on December 31, versus 50 funds and $1.54 billion respectively on September 30.

The Bottom Line

Pandora Media Inc (NYSE:P) shares fell on Thursday due to a New York Post story. For those of you interested, read next ‘11 Best Smartphones For Music Lovers‘.

Disclosure:None