Prominent hedge funds miss out as Disney rallies 10% on Q4 results

 

The Disney Company (DIS) might finally be out of the muck after shooting up 10% on Thursday following robust fiscal fourth-quarter earnings results. However, several famous hedge funds missed the boat as they sold of their Disney stakes in Q3.

Disney beat on the top and bottom lines rather narrowly, but the market exulted at the media and entertainment conglomerate’s raised profit guidance for fiscal 2025. Instead of the 4% YoY adjusted earnings per share (EPS) growth projected for 2025, management said they are now expecting “high single digits”. 

The Dow Jones Industrial Average (DJIA), which includes Disney, trades half a percentage point lower at the time of writing, in line with the NASDAQ and S&P 500.

Disney stock earnings news

Disney earned $1.14 in adjusted EPS in fiscal Q4, which ended on September 28. This was 3 cents better than the Wall Street consensus and up 39% YoY. Revenue came in $80 million above consensus at $22.57 billion, which was a 6% increase from the same quarter one year ago.

Disney’s results in Q4 primarily owe a debt to its Entertainment segment, which saw revenue rise 14% YoY. Sports revenue, however, was flat, and Experiences revenue only grew 1% YoY.

Of the $3.66 billion in total operating income during the quarter, Entertainment drew in $1.07 billion, triple its year-ago figure, while Sports took in $929 million, and Experiences brought in $1.66 billion.

In 2025, Disney expects $15 billion in cash from operations. $8 billion will be spent on capex, and $3 billion will go to share buybacks. Management said to expect the dividend to follow in the path of earnings growth.

Additionally, management said it is projected double-digit adjusted EPS growth in both 2026 and 2027.

Too bad for Nelson Peltz's Trian Fund Management investors. Peltz lost his expensive proxy battle with Disney earlier this year and exited his entire stock position in the company in Q3, according to his hedge fund's 13F filing that was disclosed this week. Additionally, mega hedge fund Bridgewater Associates exited its own large position in Disney as well during the quarter.

Disney stock chart

Disney stock catapulted above the $107.43 price level that has held important as both support and resistance since February. The price level might now become support at this juncture, though bulls will focus on the long-term significance of the $118 level, as well as the $123.50 level that knocked down a rally earlier this year.

One good sign is that the 50-day Simple Moving Average (SMA) has crossed above its 100-day counterpart. This means that the days of the bearish downtrend that commenced in July when the 200-day SMA slid above the 50-day SMA may be coming to an end.

Disney stock is quite overbought on Thursday with its Relative Strength Index (RSI) reaching 85, well above the 70 threshold. As many traders have taken profits on Thursday morning, traders will look where the share price settles before making a run at the daily high of $114.81.

DIS daily stock chart