Zacks Equity Research

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Zack’s Bear of the Day: Sprint

You have no doubt heard about the losses many hedge funds are enduring as their energy bets have tumbled over 50% in the past few months. Among those damaged funds were those run by John Paulson.

What surprised me was to learn he also lost big on telecom companies like Vodafone (NASDAQ:VOD) and Sprint (NYSE:S) which lost 30.4% and 61.4% respectively in 2014.

At the end of the third quarter of last year, Paulson’s 64.1 million shares of Sprint were worth $406.5 million. That was when the stock was trading above $6.

That stake was worth $689.6 million at the end of 2013 when Paulson added 7.5 million shares and the stock closed the year at $10.75.

Why He Lost: Earnings Decline

Without getting into the weeds of the telecom business, we can see why the stock has had plenty of sellers driving the shares down. Below are the EPS estimate tables which tell the tale of a steady decline in just the past 90 days that pushed it to a Zacks #5 Rank…

While many large investors seem comfortable buying Amazon (NASDAQ:AMZN) shares as that giant’s profits slip away but revenues keep climbing, not many are as patient with Sprint and its nearly $35 billion in sales.

And while the stock looks “inexpensive,” until the earnings picture turns around it could get even cheaper. Keep an eye on the Zacks Rank to tell you when it’s safe to run with Sprint again.

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, blogger Zacks Investment Research has a total average return of +0.5% and a 50% success rate. Zacks Investment Research is Ranked #1619 out of 4122 Bloggers

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