At a time when crude futures have hit another monthly high and gold futures are strong, shares of Amazon.com, Inc. (NASDAQ:AMZN), LinkedIn Corp (NYSE:LNKD), Gilead Sciences, Inc. (NASDAQ:GILD), Expedia Inc (NASDAQ:EXPE), and Valeant Pharmaceuticals Intl Inc (NYSE:VRX) are in the spotlight today. Valeant’s stock is trending after the company filed a belated annual report, while others have released their earnings for the last quarter. In this article, we analyze take a closer look at the events surrounding each equity and see how smart money investors have positioned themselves regarding the stock.
The hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 700 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).
Amazon Flies Due to AWS Strength
Amazon.com, Inc. (NASDAQ:AMZN)’s cloud division continues to be a bright spot for the company, as the company’s Amazon Web Services division made an operating profit of $604 million on sales of $2.57 billion for the first three months of the year, up by over 200% and 64% on the year, respectively. Because of AWS’ strength, Amazon beat its first quarter expectations handily, with EPS of $1.07 on sales of $29.13 billion, beating by $0.49 per share and $1.15 billion. Amazon expects next quarter operating income to be between $375 million and $975 million on sales of $28-$30.5 billion, versus the consensus of $465 million in income on sales of $28.33 billion. Amazon.com, Inc. (NASDAQ:AMZN)’s strong results are sure to make hedge funds happy today. According to our database of 786 elite funds, Amazon is the fifth most popular stock with 141 funds holding shares as of the end of 2015. Shares of Amazon are up 10% in the first hours of trading.
LinkedIn Rallies on Earnings
LinkedIn Corp (NYSE:LNKD) shares are trading in the green after the business social media company reported earnings of $0.74 per share on revenue of $861 million, beating analyst estimates by $0.14 per share and $32.53 million, respectively. Sales grew 35% year-over-year, powered by growth at the company’s Marketing Solutions unit and Hiring unit, which saw revenue rise 29% and 27% year-over-year, respectively. Management is expecting second quarter EPS of $0.74 to $0.77 on revenue in the range of $885 million to $890 million. That’s better than analyst estimates of $0.71 per share and $886.1 million. LinkedIn Corp (NYSE:LNKD) was included in the equity portfolios of 48 funds from our database at the end of the fourth quarter, up 10 over the quarter.
On the next page, we are going to take a look at the results presented by Gilead Sciences and Expedia, and will look into the annual report Valeant Pharmaceuticals filed following some restatements.