The markets continue to recuperate on Friday, as all major U.S stock indexes are trading in the green. Among the stocks driving these surges, we can count Cisco Systems, Inc. (NASDAQ:CSCO), Morgan Stanley (NYSE:MS), 8×8, Inc. (NASDAQ:EGHT), Golar LNG Limited (USA) (NASDAQ:GLNG), and Sprint Corp (NYSE:S), all of which have posted nice gains today. Let’s take a look into why these stocks are on the rise, and into what the funds in our database think about these companies.
Imitating hedge funds and other institutional investors can help identify some of the most profitable stocks on the market. However, our extensive research that covered the period between 1999 and 2012, showed that the best approach is to follow these investors into their small-cap stocks. Our backtests showed that the 15 most popular small-cap stocks among hedge funds managed to generate a monthly alpha of 81 basis points, versus an alpha of 0.7 percentage points posted by their top 50 large-cap picks (see more details here).
Back to Friday’s movers, let’s take a look at Cisco Systems, Inc. (NASDAQ:CSCO), which is trading up by almost 1% this afternoon after CEO Chuck Robbins appeared on Bloomberg Surveillance. Robbins discussed several issues, including the changes in the tech segment, his outlook for the company this year and the potential for M&A in this market.
Analyzing hedge fund sentiment towards Cisco Systems, Inc. (NASDAQ:CSCO), one of the first things that catches one’s attention is the decrease in institutional support that the company experienced over the latest reported quarter (the third quarter of 2015). Over the period, the number of hedge funds in our database long the stock fell by almost 7%, to 67. However, over the fourth quarter of 2015, one of the largest institutional investors of record, Ken Fisher’s Fisher Asset Management, added 134,268 shares to its holding, lifting the position to over 15.48 million shares, worth more than $420 million.
Next up is Morgan Stanley (NYSE:MS), which has gained more than 3.5% in Friday trading, a day after posting a solid bottom-line beat for the fourth quarter. Also today, the company’s China CEO Wei Christianson appeared on Fox Business to discuss the state of the Asian country’s market and economy.
Opposite to Cisco, Morgan Stanley (NYSE:MS) saw hedge fund support increase by almost 19% over the third quarter. As of September 30, 57 funds among those we track held long stakes in the company. The largest position was that of Boykin Curry’s Eagle Capital Management, which disclosed ownership of more than 16 million shares, worth over half a billion dollars.
On the next page, we will take a look at the events driving the surges at 8×8, Inc. (NASDAQ:EGHT), Golar LNG Limited (USA) (NASDAQ:GLNG), and Sprint Corp (NYSE:S).