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Why Are These Four Stocks Among Today’s Big Gainers?

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The U.S stock market is having a breather today, as investors digest the latest financial reports and also look for clues of a possible rate hike in December. Solid economic data, as well as remarks made by Fed Chair Janet Yellen during today’s testimony before the House Financial Services Committee are hinting at an increased probability of an interest rate hike at the Federal Reserve’s next policy meeting. Although stocks have turned south shortly after the opening bell, some have stayed in the green and have continued to surge. Michael Kors Holdings Ltd (NYSE:KORS)Paycom Software Inc (NYSE:PAYC)Energy Focus Inc (NASDAQ:EFOI) and Vonage Holdings Corp. (NYSE:VG) are among them. Let’s have a look at what has  investors excited about these stocks today.

Wall Street Bull

Wall Street Bull

Hedge funds have been underperforming the market for a very long time. However, this was mainly because of the huge fees that hedge funds charge as well as the poor performance of their short books. Hedge funds’ long positions actually performed better than the market. Small-cap stocks, activist targets, and spin-offs were among the bright spots in hedge funds’ portfolios. For instance, the 15 most popular small-cap stocks among hedge funds outperformed the market by more than 53 percentage points since the end of August 2012, returning 102% (read the details here). This strategy also managed to beat the market by double digits annually in our back tests covering the 1999-2012 period.

Shareholders of Michael Kors Holdings Ltd (NYSE:KORS) are all smiles today, after the company’s fiscal 2016 second quarter financial report was better than expected. The company posted revenues of $1.13 billion and earnings per share of $1.01, beating Wall Street estimates of $1.07 billion in revenues and earnings of $0.89 per share. The good news did not stop there, as the maker of luxury purses and clothing has announced plans for a $500 million share buyback program and has committed to scale down its promotions program in order to preserve its brand equity. These announcements managed to overshadow the downward revision of its full 2016 fiscal year forecasts and the stock has surged by more than 10% in the first hours of trading.

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Hedge fund sentiment towards Michael Kors Holdings Ltd (NYSE:KORS) did not change much during the second quarter, as the number of funds that we track holding a stake in the company fell to 39, from 40 at the end of March. Together they held 12.5% of the company’s common stock and their holdings were valued at more than $1.03 billion. Hedge fund prodigy David Einhorn is very bullish on the stock, having built over the second quarter a stake that amassed 3.62 million shares. Investment legend Joel Greenblatt is also optimistic about the prospects of the company, having increased his stake by 753% during the quarter to roughly 1.91 million shares.

Solid third quarter financial figures have pushed Paycom Software Inc (NYSE:PAYC) shares higher, with the stock opening 12.5% higher today and continuing to surge during morning trading. A provider of human-resources software, Paycom has registered revenues of $55.3 million, up by 51% year-over-year, and a profit of $0.08 per share when adjusted for stock option expense and other non-recurring costs. These figures were above analysts’ expectations of $51.2 million in revenues and earnings of $o.o7 per share. Paycom also said it expects revenues of $59.5 million-to-$61.5 million for the current quarter.

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The number of elite hedge funds holding Paycom Software Inc (NYSE:PAYC) in their portfolios rose significantly during the second quarter, as 18 funds reported stakes in the company, up from ten at the end of the first quarter. Their combined holdings were valued at $68.8 million, but accounted for just 3.5% of the company’s outstanding stock. Richard Driehaus decided to step up his interest in Paycom during the second quarter, boosting his stake by 21% to 606,318 shares according to Driehaus Capital’s latest 13F filing.

Head to the next page to find out why investors are pushing Energy Focus and Vonage Holdings up today.

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