Contrarian Ideas: Hedge Funds Are Selling These 10 Stocks Trading Below Target Price

Do you consider the buying trends of “smart money” investors when comparing stocks? We ran a screen with this idea in mind.

Discount to Target Price

We ran a screen of all stocks with market caps above $50 million trading below their analyst price. Analyst target prices can be very useful guides for investors. The target price is a price level set by analysts that, based on their data and estimates, represents their predictions for that company in the upcoming year. When a company’s current market price is deeply lagging to the target price, it may signal that the company has more value to price in (the stock price may rise).

We explore this idea by forming a universe of companies that are currently undervalued to target price. All stocks have a minimum of 5 analysts ratings. And because analysts often have different opinions and tend to be overly optimistic, we use the lowest analyst target price.

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Net Institutional Selling

We then screened for names with bearish sentiment from institutional investors, with significant net institutional sales over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to underperform in the future, despite already trading at a discount to target price.

Business Section: Investing Ideas

As a recap, these are the criteria for our screens:
- Market cap above $50 million
- Trading below lowest analyst target price
- Seeing significant net selloff from hedge fund managers

We were left with 10 stocks. The companies are listed below in detail.

[Related: Hedge Funds are Buying Up These 9 Stocks Trading Below Target Price]

Analysts seem to think these stocks have upside, but money mangers disagree. Do you think they are right to be selling off the stocks in our list, or are they jumping the gun?

Analyze These Ideas: Read  descriptions for all companies mentioned. Login to access free research tools and launch a practice portfolios to test your investing ideas.
1. Amarin Corporation plc ( AMRN): Focuses on developing treatments for cardiovascular diseases. Market cap at $1.29B, most recent closing price at $8.62. Of the 10 analysts that have set a target price on the stock, the lowest price target stands at $10. This implies a potential upside of 16.0% from current levels around $8.62. Net institutional sales in the current quarter at -17.6M shares, which represents about 12.59% of the company’s float of 139.78M shares.

 

2. Aastrom Biosciences, Inc. ( ASTM): Engages in developing autologous cell therapies for the treatment of severe and chronic cardiovascular diseases. Market cap at $59.1M, most recent closing price at $1.35. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $1.65. This implies a potential upside of 22.22% from current levels around $1.35. Net institutional sales in the current quarter at -2.6M shares, which represents about 5.97% of the company’s float of 43.58M shares.

 

3. BPZ Resources, Inc. ( BPZ): Engages in the exploration, development, and production of oil and natural gas in Peru and Ecuador. Market cap at $367.16M, most recent closing price at $3.14. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $4. This implies a potential upside of 27.38% from current levels around $3.14. Net institutional sales in the current quarter at -5.3M shares, which represents about 5.93% of the company’s float of 89.39M shares.

 

4. Callidus Software Inc. ( CALD): Provides sales performance management (SPM) software and services. Market cap at $169.73M, most recent closing price at $4.69. Of the 5 analysts that have set a target price on the stock, the lowest price target stands at $6. This implies a potential upside of 27.93% from current levels around $4.69. Net institutional sales in the current quarter at -1.9M shares, which represents about 6.02% of the company’s float of 31.58M shares.

 

5. MAKO Surgical Corp. ( MAKO): A medical device company, markets its advanced robotic arm solution and orthopedic implants for orthopedic procedures in the United States and internationally. Market cap at $512.23M, most recent closing price at $11.15. Of the 8 analysts that have set a target price on the stock, the lowest price target stands at $13. This implies a potential upside of 16.59% from current levels around $11.15. Net institutional sales in the current quarter at -6.1M shares, which represents about 15.13% of the company’s float of 40.31M shares.

 

6. Monster Worldwide, Inc. ( MWW): Provides online employment solutions worldwide. Market cap at $696.74M, most recent closing price at $5.95. Of the 8 analysts that have set a target price on the stock, the lowest price target stands at $7.25. This implies a potential upside of 21.84% from current levels around $5.95. Net institutional sales in the current quarter at -6.9M shares, which represents about 6.09% of the company’s float of 113.37M shares.

 

7. PetroQuest Energy Inc. ( PQ): Operates as an independent oil and gas company. Market cap at $320.94M, most recent closing price at $5.01. Of the 10 analysts that have set a target price on the stock, the lowest price target stands at $6. This implies a potential upside of 19.76% from current levels around $5.01. Net institutional sales in the current quarter at -2.5M shares, which represents about 5.16% of the company’s float of 48.44M shares.

 

8. Stone Energy Corp. ( SGY): Engages in the acquisition, exploration, exploitation, development, and operation of oil and gas properties located in the Gulf of Mexico and Appalachia region. Market cap at $1.06B, most recent closing price at $21.39. Of the 10 analysts that have set a target price on the stock, the lowest price target stands at $26. This implies a potential upside of 21.55% from current levels around $21.39. Net institutional sales in the current quarter at -2.7M shares, which represents about 5.73% of the company’s float of 47.10M shares.

 

9. ZAGG Inc. ( ZAGG): Designs, manufactures, and distributes protective coverings, audio accessories, and power solutions for consumer electronic and hand-held devices, under the invisibleSHIELD, ZAGGaudio, and ZAGGskins brand names, primarily in the United States and Europe. Market cap at $235.16M, most recent closing price at $7.68. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $9. This implies a potential upside of 17.1875% from current levels around $7.68. Net institutional sales in the current quarter at -1.3M shares, which represents about 5.31% of the company’s float of 24.47M shares.

 

10. Horsehead Holding Corp. ( ZINC): Produces and sells specialty zinc and zinc-based products in North America. Market cap at $435.98M, most recent closing price at $9.92. Of the 5 analysts that have set a target price on the stock, the lowest price target stands at $12. This implies a potential upside of 20.96% from current levels around $9.92. Net institutional sales in the current quarter at -2.5M shares, which represents about 5.78% of the company’s float of 43.23M shares.

 

 

( List by Kapitall’s Rebecca Lipman)

 

 

 

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