Sometimes following the gurus gives you a stock idea to buy. In this case, looking at these three stocks may cause you to pause and re-examine whether you want to own any one of these names. These three stocks hit new 52 week lows today and had heavy guru sales in the last quarter and into this year. Each of them has specific recent problems because of their earnings or guidance.
To run this screen yourself, go to 52 Week Low Guru stocks.
Hutchinson Technology (HTCH): Hudson Technology is a $61 million market cap whose primary business is producing parts for disk drives. Shares dipped to 52 week lows today after the company announced a consolidation and restructuring plan that will see them cut 30% to 40% of their U.S. workforce. They’re trying to cut costs by $45 million to $60 million in 2011 in response to decrease in sales. Three gurus own shares: Arnold Van Den Berg, Jim Simons, and Donald Smith. Simons and Smith sold shares late last year, and Bruce Kovner and Chuck Royce sold out in Q2 2010. Van Den Berg currently owns 8.7% of the company.
Trident Microsystems (TRID): Trident Microsystems also hit new 52 week lows today. Trident produces integrated circuits for consumer electronics, primarily for set top TV boxes. Shares have been hurt be a disappointing quarterly earnings report, reduced margins, and increased competition. They have about $0.34 per share of cash on their books and no long term debt, but they’ve continued to report losses and are again guiding to a loss in the first quarter. Chuck Royce recently sold out completely, and Jim Simons, John Buckingham, and Mario Gabelli reduced their positions last quarter. Trident Microsystems is certainly headed in the wrong direction and their cash burn seems to be a problem.
CNinsure (CISG): CISG is a $683 million market cap insurer operating in China. They offer brokerage services, claims services, and they primarily focus on property and casualty policies. The company announced earnings last week and provided disappointing guidance, which hurt their shares. Like the two stocks above, CISG also hit new 52 lows today of $14.85. Book value remains reasonable, but uncertainty has pushed some investors out. In Q4 2010 a few Tiger Cubs exited their positions, and some other gurus followed suit. In all, seven gurus sold out of their positions last quarter: Chase Coleman, Robert Karr, Steven Cohen, Jeremy Grantham, Paul Tudor Jones, Ron Baron, and Jim Simons. That’s a formidable group and they seem to have gotten out at a good time.
Disclosure: No positions
About the author:
Steven KielSteven Kiel is the president and chief investment officer for Arquitos Capital Management, a Virginia-based investment management firm. He is a graduate of George Mason School of Law and a captain in the Army Reserves. He manages two spoke funds, The Freedom Fund, a value-oriented portfolio, and The Hayek Fund, a portfolio dedicated to free market principles. He can be contacted at firstname.lastname@example.org or through the firm's website at www.arquitos.com.