Funds are selling these high-growth stocks near 52 week lows

Funds are selling these high-growth stocks near 52 week lows

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If you like to sell or buy stocks near 52 week lows, the following screen may appeal to you.

In a New York Times editorial published during the height of the economic crisis, Warren Buffett famously wrote, "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful." That quote popped up in a Monday Wall Street Journal interview with venture capitalist Bill Gurley, who has invested in OpenTable, Uber, and Zillow to name a few.

Gurley believes investors are giving away too much money, and, as a result, startups are burning through that cash at unprecedented rates. "I think that Silicon Valley as a whole or that the venture-capital community or startup community is taking on an excessive amount of risk right now," he told the Journal

If that risk talk sounds familiar, it's because both Federal Reserve Chairwoman Janet Yellen and Dallas Fed President Richard Fisher made some notable comments on risk and the stock market this summer. Fisher even quoted Yellen in a speech at USC:
 

"In her recent lecture at the International Monetary Fund, Fed Chair Janet Yellen said, 'I am also mindful of the potential for low interest rates to heighten the incentives of financial market participants to reach for yield and take on risk, and of the limits of macroprudential measures to address these and other financial stability concerns,” adding that “[a]ccordingly, there may be times when an adjustment in monetary policy may be appropriate to ameliorate emerging risks to financial stability.' "


While Gurley, Fisher, and Yellen are discussing risk in different contexts, all three agree that people are playing fast and loose with their money. And that brings us back to the Buffet quote about greed and fearfulness. Because if people are investing unwisely, then that means there are inefficiencies in the market that one can take advantage of. 

Although Buffet was talking about the long-term prospects of then-suffering American stocks, we decided to take a closer look at stocks that currently appear to be striking fear into the hearts of investors.

We began by assembling a group of stocks with a significant increase in institutional selling in the current quarter. This means institutional investors like hedge funds and mutual funds have sold these stocks in large quantities, likely because they no longer have as much bullish sentiment toward them. For our purposes, we looked for net institutional sales representing 2% or more of share float.

Next, we looked for technical indicators—pertaining to the market's movement rather than the financial health of a company—that could explain why funds are ditching the stocks. First, we screened for stocks that are trading between 0–5% above their 52-week low. When stocks are trading near or at this level, some investors choose to sell because they believe the stock is on a downward trend. However, others like to buy stocks when they're at this level because they believe it to be discounted or a rebound opportunity.

Keeping this in mind, we then screened for stocks with earnings per share (EPS) growth of 25% or higher for this year and next year

This left us with five stocks on our list. Do you think institutional investors are right to sell these stocks near 52 week lows even though they're high-growth? Use this list as a starting point for your own analysis, and let us know what you think in the comments.

Click on the interactive chart to view data over time. 

1. Bill Barrett Corp. (BBG, Earnings, Analysts, Financials): Engages in the exploration, development, and production of natural gas and crude oil principally in the Rocky Mountain region of the United States. Market cap at $1.08B, most recent closing price at $21.29.

EPS growth this year at 93.00%. EPS growth next year at 1766.70%.

The stock is trading 3.35% above its 52-week low.

Net institutional sales in the current quarter at -3.4M shares, which represents about 7.27% of the company's float of 46.76M shares. The two top holders of the stock are AllianceBernstein, L.P. with 3.4 million shares and The Vanguard Group, Inc. with 3.0 million shares.

 

2. Bilgari Holdings Inc. (BH, Earnings, Analysts, Financials): Engages in the ownership, development, operation, and franchising of restaurants in the United States. Market cap at $611.7M, most recent closing price at $345.74.

EPS growth this year at 553.40%. EPS growth next year at 113.83%.

The stock is trading 1.85% above its 52-week low.

Net institutional sales in the current quarter at -73.6K shares, which represents about 6.34% of the company's float of 1.16M shares. The two top holders of the stock are Bilgari Capital Corp with 250,200 shares and Dimensional Fund Advisors LP with 111,600 shares. 

 

3. Bon-Ton Stores Inc. (BONT, Earnings, Analysts, Financials): Operates department stores in the mid-size and metropolitan markets of the United States. Market cap at $192.81M, most recent closing price at $9.12.

EPS growth this year at 83.60%. EPS growth next year at 150.12%.

The stock is trading 4.11% above its 52-week low.

Net institutional sales in the current quarter at -2.1M shares, which represents about 22.58% of the company's float of 9.30M shares. The two top holders of the stock are DW Investment Management, LP with 1.7 million shares and Gabelli Funds, LLC with 1.4 million shares.

 

4. The Babcock & Wilcox Company (BWC, Earnings, Analysts, Financials): Provides clean energy technology and services primarily for the nuclear, fossil, and renewable power markets worldwide. Market cap at $3.09B, most recent closing price at $28.55.

EPS growth this year at 60.70%. EPS growth next year at 37.79%.

The stock is trading 4.18% above its 52-week low.

Net institutional sales in the current quarter at -11.6M shares, which represents about 11.61% of the company's float of 99.91M shares. The two top holders of the stock are Price (T. Rowe) Associates Inc with 16.8 million shares and Bkue Harbour Group, LP with 7.0 million shares.

 

5. Hercules Offshores, Inc. (HERO, Earnings, Analysts, Financials): Provides shallow-water drilling and marine services to the oil and natural gas exploration and production industry in the United States. Market cap at $522.5M, most recent closing price at $3.12.

EPS growth this year at 78.50%. EPS growth next year at 60.27%.

The stock is trading 0.65% above its 52-week low.

Net institutional sales in the current quarter at -11.2M shares, which represents about 7.2% of the company's float of 155.60M shares. The two top holders of the stock are Dimensional Fund Advisors LP with 13.3 million shares and The Vanguard Group, Inc. with 8.9 million shares.

 

(List compiled by Mary-Lynn Cesar. Institutional data sourced from Fidelity. Monthly return data sourced from Zacks Investment Research. All other data sourced from finviz.)

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