Managing Risk: These Things Freak Out Big Shot Money Managers

Managing Risk: These Things Freak Out Big Shot Money Managers

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Hedge funds and other big money managers are often referred to as the "Smart Money" for their access to more detailed market information than the average investor, not to mention the superior investment skills that are supposed to have landed them their jobs. (STAY AHEAD OF THE CURVE: Follow Kapitall on Twitter)

But "smart" does not make money managers immune to fear. The market is, after all, a battleground.

MarketWatch was struck by the reservation of some of the big hedge funds players and approached "five seasoned professionals" based outside the U.S about their biggest stock-market worries. Here's what they found out:

1. Khiem Do, manager of Baring Asset Management's closed-end Asia Pacific Fund, Inc. (APB), says Europe's debt troubles are concerning. "How much has to be written off and who is going to take the haircut?" His reaction is to stay away from banks in the US and Europe and invest in Asian banks instead. However he stays invested in US utilities, telecommunications, consumer staples, technology and energy stocks. "We don't want to be too bearish on the U.S. economy right now."

2. Rainer Baumann of Sustainable Asset Management, based in Zurich, says US economic growth will probably fall short of expectations. "Fundamentals seem to be fragile," Baumann said. He says companies "with a clear way of addressing long-term trends, problems and risks can often work through tough times."

3. Didier Saint-Georges, member of the Investment Committee at Carmignac Gestion in Paris, is also worried about economic growth. "Europe is in the doldrums, U.S. growth is stabilizing at an average level, but we have good prospects for consumer-led economic growth in emerging markets." His firm has holdings in "a lot of Chinese, Indian, Brazilian and Indonesian stocks oriented towards local consumer demand." He warns not to be strongly tempted by high dividends.

4. Neil Dwane, chief investment officer Allianz Global Investors/RCM, based in London is worried about the Middle East. "Specifically, he's paying close attention to the situation in Syria and Iran and the ramifications of last year's Arab Spring revolutions," explains MarketWatch. Dwane argues that rising oil prices can put the growth of already weakened emerging markets at risk.

5. Finally, Nick Nefouse of BlackRock Inc., based in London, is also concerned about continued volatility and stalled growth. He says to invest in "quality companies that can withstand volatility better than rivals, and stocks that pay dividends," and suggested the global telecom sector.

Business Section: Investing Ideas

A lot of the firms mentioned their concerns about growth stalling, so we wanted to run a screen on stocks that are expected to buck the trend.

Specifically, we searched for companies with EPS growth over the next five years above 20%. To improve the quality of our selection we also looked for sales growth over 20% in the past 5 years. We were left with 149 names.

We then screened for significant levels of institutional buying in the third quarter and short covering month-over-month. We were left with the 9 names listed in detail below.

Do you think these high-growth stocks have what it takes to overcome investor concerns?

 

Use the Turbo Chart to Compare the Performance of the First Two Companies in the List to the S&P 500:

 

“1. Bridgepoint Education, Inc. (BPI, Earnings, Analysts, Financials): Provides postsecondary education services. EPS growth for the next 5 years at 21.67%. Sales growth in the past 5 years at 145.79%. Net institutional sales in the current quarter at -1.3M shares, which represents about 7.96% of the company's float of 16.34M shares. Shares shorted have decreased from 10.65M to 10.02M over the last month, a decrease which represents about 3.86% of the company's float of 16.34M shares.

 

“2. Cninsure Inc. (CISG, Earnings, Analysts, Financials): Provides insurance brokerage and agency services, and insurance claims adjusting services in the People's Republic of China. EPS growth for the next 5 years at 20.53%. Sales growth in the past 5 years at 59.54%. Net institutional sales in the current quarter at -4.1M shares, which represents about 15.76% of the company's float of 26.01M shares. Shares shorted have decreased from 2.44M to 1.96M over the last month, a decrease which represents about 1.85% of the company's float of 26.01M shares.

 

“3. F5 Networks, Inc. (FFIV, Earnings, Analysts, Financials): Provides technology that optimizes the delivery of network-based applications, and the security, performance, and availability of servers, data storage devices, and other network resources in the Americas, EMEA, Japan, and the Asia Pacific. EPS growth for the next 5 years at 21.36%. Sales growth in the past 5 years at 23.93%. Net institutional sales in the current quarter at -3.4M shares, which represents about 4.32% of the company's float of 78.78M shares. Shares shorted have decreased from 2.39M to 1.60M over the last month, a decrease which represents about 1.% of the company's float of 78.78M shares.

 

“4. Focus Media Holding Ltd. (FMCN, Earnings, Analysts, Financials): Operates out-of-home advertising network using audiovisual digital displays in China. EPS growth for the next 5 years at 26.78%. Sales growth in the past 5 years at 49.9%. Net institutional sales in the current quarter at -11.0M shares, which represents about 12.52% of the company's float of 87.83M shares. Shares shorted have decreased from 13.33M to 9.11M over the last month, a decrease which represents about 4.8% of the company's float of 87.83M shares.

 

“5. NetSuite Inc. (N, Earnings, Analysts, Financials): Provides an on-demand integrated business management application suite to businesses and divisions of companies worldwide. EPS growth for the next 5 years at 30.93%. Sales growth in the past 5 years at 28.6%. Net institutional sales in the current quarter at -1.2M shares, which represents about 4.78% of the company's float of 25.10M shares. Shares shorted have decreased from 2.93M to 2.55M over the last month, a decrease which represents about 1.51% of the company's float of 25.10M shares.

 

“6. Universal Display Corp. (PANL, Earnings, Analysts, Financials): Engages in the research, development, and commercialization of organic light emitting diode (OLED) technologies and materials for use in flat panel display, solid-state lighting, and other product applications. EPS growth for the next 5 years at 24.5%. Sales growth in the past 5 years at 24.66%. Net institutional sales in the current quarter at -1.1M shares, which represents about 3.22% of the company's float of 34.12M shares. Shares shorted have decreased from 13.45M to 12.53M over the last month, a decrease which represents about 2.7% of the company's float of 34.12M shares.

 

“7. SouFun Holdings Ltd. (SFUN, Earnings, Analysts, Financials): Provides marketing, listing, technology, and information consultancy services to real estate and home furnishing industries in the People's Republic of China. EPS growth for the next 5 years at 28.35%. Sales growth in the past 5 years at 54.7%. Net institutional sales in the current quarter at -1.8M shares, which represents about 16.36% of the company's float of 11.00M shares. Shares shorted have decreased from 1.90M to 1.41M over the last month, a decrease which represents about 4.42% of the company's float of 11.08M shares.

 

“8. VanceInfo Technologies Inc. (VIT, Earnings, Analysts, Financials): Engages in the provision of information technology (IT) services. EPS growth for the next 5 years at 22.25%. Sales growth in the past 5 years at 68.7%. Net institutional sales in the current quarter at -3.7M shares, which represents about 12.13% of the company's float of 30.51M shares. Shares shorted have decreased from 7.10M to 5.65M over the last month, a decrease which represents about 4.75% of the company's float of 30.51M shares.

 

“9. Vistaprint N.V. (VPRT, Earnings, Analysts, Financials): Operates as an online provider of marketing products and services to micro businesses worldwide. EPS growth for the next 5 years at 21.6%. Sales growth in the past 5 years at 39.96%. Net institutional sales in the current quarter at -1.9M shares, which represents about 6.68% of the company's float of 28.43M shares. Shares shorted have decreased from 11.08M to 10.30M over the last month, a decrease which represents about 2.74% of the company's float of 28.43M shares.

 

 

(Written by Rebecca Lipman. Institutional data sourced from Fidelity, short data from Yahoo! Finance, all other data sourced from Finviz.)

 

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