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Pandora Media Inc (P)’s Shares Rally After Better-Than-Expected Quarterly Results

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Positive second quarter 2015 financial results have helped Pandora Media Inc (NYSE:P)’s shares rally by 15.99% in the current trading session. The online radio company exceeded the markets’ earnings and revenue estimates for the quarter ending on June 30. Pandora Media Inc (NYSE:P) reported revenues of $285.56 million against expectations of $283.13 million, whereas its non-GAAP earnings per share were $0.05 against Wall Streets’ estimate of $0.02. The internet radio company has witnessed heavy trading, with 16.26 million shares traded at the time of reporting compared to average daily trading volume of 4.04 million shares. Some of the plus points from the quarterly results include 30% year-over-year growth in quarterly revenues, 37% growth in mobile revenues, and a year-over-year growth of 30% in the advertising revenues of the firm.

While discussing the quarterly revenues, Brian McAndrews, Chairman and CEO of Pandora, said, “Our advertising investments, particularly in local, are paying off. This quarter, local ad revenue reached an all-time high, driving record RPMs.” After better-than-expected second quarter financial results, Pandora Media Inc (NYSE:P) has announced an improved annual guidance, with expected revenues of $1.175 billion to $1.185 billion against a prior outlook of $1.16 to $1.18 billion.

One Hit Wonders of the 90s

Smart money held a bearish outlook of the stock during of the first quarter, with only 37 hedge fund managers investing $752.05 million in the company while 43 funds had $909.78 million in shares held at the end of 2014. The shares of Pandora Media declined 8.16% in the first quarter, lowering the aggregate investments by that amount, but there was a decline beyond just the share loss. Among other moves, Seymour Sy Kayfman and Michael Stark‘s Crosslink Capital sold off 250,000 shares of the company in June, according to its form 4 filing with the SEC.

Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 139% over the last 34 months, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).

The insiders shared the sentiment of the hedge fund managers by disposing of shares of the company. The founder of Pandora, Timothy Westergen, sold 350,000 shares of the radio company in 2015 with back-to-back sales of 95,000 shares each on February 25 and 26.

For a better understanding of hedge fund sentiment, let’s take a look at the fresh action surrounding Pandora Media Inc (NYSE:P).

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