Why Finish Line, Xerox, QUALCOMM, and Two More Stocks Are Trending Today

It’s been a pretty ugly day on Wall Street as the Dow Jones is off 440 points, while the S&P 500 is down 2.7%. Traders have been in a dour mood after yesterday’s ‘Brexit’ decision. Although Britain might not officially leave the EU for another two years, the ramifications of the vote could cause a recession in both Britain and the EU.

Among the stocks buzzing admist the sea of red are Finish Line Inc (NASDAQ:FINL), Xerox Corp (NYSE:XRX), QUALCOMM, Inc. (NASDAQ:QCOM), PPL Corp (NYSE:PPL), and Sonic Corporation (NASDAQ:SONC). Let’s take a closer look and find out how elite funds are positioned among the five.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).

Finish Line Surges on Earnings

Finish Line Inc (NASDAQ:FINL) shares are almost 15% in the green after the company reported solid fiscal first quarter results. In the quarter, Finish Line earned an adjusted $0.23 per share on revenue of $453.52 million, beating the consensus by $0.01 per share and $4.52 million, respectively. Comparable store sales inched up 1.5% year-over-year, while adjusted operating margin inched lower by 180 basis points to 3.3%. Fiscal 2017 guidance is for comparable store sales to rise 3% to 5% percent and for adjusted earnings to come in at $1.50-$1.56 per share. Of the 766 elite funds we track, 16 funds owned $57.06 million worth of Finish Line Inc (NASDAQ:FINL)’s stock, which accounted for 6.10% of the float on March 31, versus 18 funds and $99.67 million, respectively, a quarter earlier.

Xerox Picks a New Future Leader

Xerox Corp (NYSE:XRX) is in the spotlight after the company’s board announced Jeff Jacobson will be the new CEO of Xerox Corporation following the completion of the company’s planned separation into two publicly traded companies by the end of 2016. Jacobson is currently the head executive of Xerox Technology and will replace Ursula Burns. Shares of Xerox are 3% lower today due to broader market weakness. A total of 29 funds tracked by us had a bullish position in Xerox Corp (NYSE:XRX) at the end of March, up by four funds from the previous quarter.

On the next page, we examine QUALCOMM, PPL Corp, and Sonic Corporation.

QUALCOMM Tries to Strengthen Its China Operations

QUALCOMM, Inc. (NASDAQ:QCOM) is trending on the news that the company has filed a patent lawsuit against Chinese electronics manufacturer Meizu Technology. Meizu has refused paying Qualcomm licensing fees for the mobile chip giant’s patents and has also not made an honest effort to resolve the issue. If Qualcomm wins the case, which is the first of a kind for the chip-maker in China, the company could potentially enforce its IP better and make more money from the country. 59 top funds were long QUALCOMM, Inc. (NASDAQ:QCOM) at the end of the first quarter.

PPL Corp Drops Despite Brexit Clarification

Utility conglomerate PPL Corp (NYSE:PPL) is 3% lower despite the company releasing a press release stating that, ‘the results of the June 23 referendum on Britain exiting the European Union are not expected to significantly impact its operations in the United Kingdom’. PPL owns four utilities serving around 8.0 million customers in the United Kingdom. The company reaffirmed 2016 reported earnings forecast of $2.29 to $2.49 per share and earnings from ongoing operations forecast of $2.25 to $2.45 per share. Traders could be selling because the long term depreciation of the British pound could cause the company’s earnings growth rate to slow somewhat. Among the funds we track, 28 funds owned shares of PPL Corp (NYSE:PPL) at the end of the first quarter, up by nine funds from the previous quarter.

Sonic Reports Mixed Earnings

Sonic Corporation (NASDAQ:SONC) shares are 7% in the red after the fast food chain reported fiscal third-quarter earnings of $0.43 per share on revenue of $165.24 million, beating the bottom-line estimates by $0.01 per share, but missing the top-line by $0.92 million. Same store sales inched up 2% year-over-year while the company repurchased 1.2 million outstanding shares in the quarter. Management is reaffirming the previous guidance of adjusted earnings per share growth for fiscal year 2016 of 20% to 25%. The company also expects 2% to 4% same-store sales growth, and 50 to 60 new franchise drive-in openings for the year. A total of 16 funds tracked by us were long Sonic Corporation (NASDAQ:SONC) at the end of March, down by seven funds from the previous quarter.

Disclosure: none