Feb 29, 2016 (LBO) – Popular stocks are taking a beating this year due to redemptions by sovereign and wealth funds, analysts say.
These companies are victims of their own success as investors sell winners to meet redemptions, according to BNP Paribas Investment Partners.
For instance, Amazon.com Inc. is down 18 percent in 2016 after more than doubling last year, according to a Bloomberg report. Tenet Healthcare Corp. lost 15 percent. The companies have a rating of at least 4 where 5 represents unanimous buy calls from analysts.
Popular stocks are down 11 percent, on average, while the least-favorite stocks are down just 3.4 percent.
Chinese electrical appliances maker Midea, which fell 18 percent this year, is China’s biggest manufacturer of consumer appliances with a 17.1 percent market share in 2015.
Activision Blizzard has lost 18 percent in 2016, even though 18 strategists have reaffirmed they are bullish on the stock. Similarly, Chinese medicine maker Yunnan Baiyao Group Co., which has a buy rating from every analyst Bloomberg tracks, is down 22 percent after reporting record profit.
“This year there’s probably redemption pressure on sovereign funds and mutual funds, so those stocks do face selling pressure,” said Hong Kong-based Caroline Maurer, head of greater China equities at BNP Paribas Investment Partners.
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