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Despite concerns about an annual springtime drop in share prices, markets enjoyed a healthy bounce to start the week. So how do experts such as analysts and hedge fund managers react on days like this?

The list below includes six stocks trading below rock bottom price targets set by independent analysts, yet institutional investors have turned bearish on their future prospects. Given the bullish market, is this pessimism justified?

Building the List

To generate this list we began by searching for stocks that are trading at significant discounts to their fair value based on analyst target price, with the assumption that they will move up to their fair value in the near future. We only included stocks with five or more analyst ratings. And because analyst prices are notoriously inflated, we compared current price to the lowest target.

We then screened the list for companies with significant net institutional sell-off 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 stocks to underperform despite their potential upside.

The List

For an ‪interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Hedge funds are signaling that they disagree with analysts on the future prospects of these companies. Do you agree with their sentiment? Use this list as a starting point for your own analysis.

1. MagnaChip Semiconductor Corporation (NYSE:MX): Designs and manufactures analog and mixed-signal semiconductor products for high-volume consumer applications.

  • Market cap at $541.42M, most recent closing price at $15.29.
  • Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $20. This implies a potential upside of 30.80% from current levels around $15.29.
  • Net institutional sales in the current quarter at -1.9M shares, which represents about 6.87% of the company's float of 27.65M shares.
  • The top three holders of the stock are Marc Lasry, FMR LLC and Apollo Management Holdings, L.P.


2. Allot Communications Ltd. (NASDAQ:ALLT): Engages in developing, selling, and marketing Internet protocol service optimization solutions in Europe, the Middle East, Africa, the Americas, Asia, and Oceania.

  • Market cap at $358.6M, most recent closing price at $11.01.
  • Of the 11 analysts that have set a target price on the stock, the lowest price target stands at $14. This implies a potential upside of 27.16% from current levels around $11.01.
  • Net institutional sales in the current quarter at -2.4M shares, which represents about 8.57% of the company's float of 28.02M shares.
  • The top three holders of the stock are FMR LLC, Turner Investments L.P. and Alydar Partners, LLC.


3. Callon Petroleum Co. (NYSE:CPE): Engages in the acquisition, exploration, development, and production of crude oil and natural gas properties in the onshore in Louisiana and Texas, and the offshore waters of the Gulf of Mexico.

  • Market cap at $141.94M, most recent closing price at $3.56.
  • Of the 9 analysts that have set a target price on the stock, the lowest price target stands at $4.5. This implies a potential upside of 26.40% from current levels around $3.56.
  • Net institutional sales in the current quarter at -1.9M shares, which represents about 5.21% of the company's float of 36.48M shares.
  • The top three holders of the stock are Franklin Resources, Inc., RR Advisors, LLC and Lombardia Capital Partners, LLC.

4. LeapFrog Enterprises Inc. (NYSE:LF): Provides technology-based learning platforms worldwide.

  • Market cap at $597.15M, most recent closing price at $8.77.
  • Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $11. This implies a potential upside of 25.43% from current levels around $8.77.
  • Net institutional sales in the current quarter at -5.4M shares, which represents about 9.14% of the company's float of 59.05M shares.
  • The top three holders of the stock are Wells Fargo & Company, Franklin Resources, Inc and The Vanguard Group, Inc.


5. Amarin Corporation plc (NASDAQ:AMRN): Focuses on developing treatments for cardiovascular diseases.

  • Market cap at $1.03B, most recent closing price at $6.84.
  • Of the 10 analysts that have set a target price on the stock, the lowest price target stands at $8.5. This implies a potential upside of 24.27% from current levels around $6.84.
  • Net institutional sales in the current quarter at -9.8M shares, which represents about 6.91% of the company's float of 141.74M shares.
  • The top three holders of the stock are Abingworth, LLP, Jennison Associates LLC and FMR LLC.

6. Quality Distribution Inc. (NASDAQ:QLTY): Engages in the truckload transportation of bulk chemicals primarily in North America.

  • Market cap at $209.37M, most recent closing price at $7.74.
  • Of the 10 analysts that have set a target price on the stock, the lowest price target stands at $9. This implies a potential upside of 16.28% from current levels around $7.74.
  • Net institutional sales in the current quarter at -3.0M shares, which represents about 11.64% of the company's float of 25.78M shares.
  • The top three holders of the stock are Apollo Management Holdings, L.P., FMR LLC and Wellington Management Company, LLP.

* Institutional data sourced from Fidelity, target price data sourced from Thomson/First Call (via Yahoo! Finance), all other data sourced from Finviz.

Source: Hedge Funds Are Selling 6 Small Caps Undervalued To Lowest Target Price