Here’s Why Traders Are Buzzing about These Five Stocks on Friday

On the last day of the trading week, crude futures are modestly higher and the S&P 500 futures are pretty much flat. Among the stocks that display more volatility than usual are Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOG), General Electric Company (NYSE:GE), Concordia Healthcare Corp (NASDAQ:CXRX), and TerraForm Power Inc (NASDAQ:TERP). Let’s take a look at the news that attracted attention to these stocks and analyze how hedge funds have been trading these stocks.

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

Microsoft Down On Earnings

Microsoft Corporation (NASDAQ:MSFT) shares have lost 8% so far today after the tech giant reported a soft third fiscal quarter. For the period, Microsoft earned $0.62 per share on revenue of $22.1 billion, missing the bottom-line by $0.02 per share and meeting top-line estimates. Sales dropped 5.5% on the year due to the strong dollar and the challenging PC market. Although sales of the company’s cloud offering, Azure, more than doubled (rose 120%) in the quarter, investors were not as impressed because of Azure’s small base compared to Microsoft’s total revenues. Guidance is a bit light and the company expects next quarter sales to be in the range of $21.7 billion to $22.4 billion, versus estimates of $23.1 billion. Jeffrey Ubben’s ValueAct Capital was among 140 top funds, which Insider Monkey tracks, that owned shares of Microsoft Corporation (NASDAQ:MSFT) at the end of the fourth quarter of 2015.

Traders Sell Alphabet After Quarterly Miss

Search and mobile giant Alphabet Inc (NASDAQ:GOOG) wasn’t immune to a bad quarter either, as the company, like Microsoft, reported disappointing results. In the first quarter, Alphabet earned $7.50 per share on sales of $20.26 billion, versus estimates of $7.97 and $20.37 billion, respectively. Declining ad prices were one of the reasons for the lower revenue, as the average cost per click dropped by 9% year-over-year. In terms of segment performance, Alphabet’s Google division is still the 800 pound gorilla, with the segment’s sales jumping 17% year-over-year to $20.1 billion. The Other Bets division, which includes self driving cars, reported revenue of $166 million and an operating loss of $802 million. Andreas Halvorsen’s Viking Global owned more than 1.85 million class A shares of Alphabet Inc (NASDAQ:GOOGL) at the end of December. Shares of the company are down 6% in the intraday trading.

On the next page, we take a closer look at the news involving General Electric Company, Concordia Healthcare Corp, and TerraForm Power.

General Electric Shares Lower on Revenue Short Fall 

General Electric Company (NYSE:GE) shares are modestly lower, by 1.5%, after the company turned in a mixed first quarter. Although the company beat earnings estimates by $0.02 per share with EPS of $0.21, it missed sales expectations by $70 million, having reported a figure of $27.6 billion. In terms of segment performance, General Electric’s industrial operating earnings fell by 12% year-over-year to $1.44 billion and its vertical earnings rose by 43.3% to $496 million. The company returned $8.3 billion back to its shareholders in the quarter, with $6.1 billion in form of buybacks. Warren Buffett’s Berkshire Hathaway owned 10.59 million shares of General Electric Company (NYSE:GE) at the end of December.

Concordia Up on Strategic Alternatives

Concordia Healthcare Corp (NASDAQ:CXRX) shares are trading 6% in the green after the company announced that it has formed a special committee in its Board of Directors to consider strategic alternatives. Concordia Healthcare Corp (NASDAQ:CXRX) shares have fallen more than 60% from their September 2015 highs and Bloomberg has reported that the private equity firm Blackstone Group LP might be interested in acquiring Concordia. A total of 18 elite funds owned 5.6% of the company as of the most recent 13F reporting period.

TerraForm Power Not as Effected By SunEdison Bankruptcy

Although Sunedison Inc (NYSE:SUNE) has declared bankruptcy, TerraForm Power Inc (NASDAQ:TERP) has said the company, has ‘no plans to file for bankruptcy’ itself. Despite TerraForm Power Inc (NASDAQ:TERP) being a yieldco of Sunedison, it believes it has enough liquidity to continue normal operations in the wake of the bankruptcy by its parent. The equity interests of TerraForm Power’s assets are off-limits to SunEdison’s creditors. A total of 24 top funds in our database held more than a third of TerraForm Power’s float at the end of December.

Disclosure: none