All three index futures are slightly in the red this morning after North Korea launched a missile into Japanese waters. Although the move is likely just saber-rattling, any escalation between the two countries could cause the market to go into ‘risk-off’ mode.
In this article, we’ll examine the latest quarterly financial results out of five companies, Spectra Energy Corp. (NYSE:SE), RR Donnelley & Sons Co (NASDAQ:RRD), Clorox Co (NYSE:CLX), HollyFrontier Corp (NYSE:HFC), and Vitamin Shoppe Inc (NYSE:VSI) and see what hedge funds think of each stock using SEC filings.
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).
Spectra Misses the Consensus
Spectra Energy Corp. (NYSE:SE) is in the spotlight today after the company reported second quarter earnings of $0.24 per share on sales of $1.16 billion, missing the consensus marks by $0.03 and $100 million respectively. The company’s execution backlog grew to $10 billion, with $1.8 billion of new demand-pull contracts in the quarter. EBITDA was $655 million for the period, slightly higher than last year’s $652 million. Ongoing distributable cash flow came in at $271 million and management continues to expect full-year dividend coverage of 1.2-times. Jim Simons‘ Renaissance Technologies cut its position in Spectra Energy Corp. (NYSE:SE) by 29% during the first quarter to 765,600 shares as of March 31.
RR Donnelley & Sons Beats
The second quarter was a solid one for RR Donnelley & Sons Co (NASDAQ:RRD) as the company beat top- and bottom-line estimates with its EPS of $0.34 and revenue of $2.73 billion. Analysts were expecting $0.06 per share and $60 million less, respectively. The company’s guidance was a little mixed however, with management expecting net sales to come in at the low end of its previous guidance of $11.3 billion-to-$11.5 billion for the full year, and for its non-GAAP adjusted EBITDA margin to come in at the high end of its previous outlook of 10.4%-to-10.6%. Management continues to expect free cash flow of $400 million-to-$500 million for the full year. Of the 766 active hedge funds that we track, 22 funds were long RR Donnelley & Sons Co (NASDAQ:RRD) on March 31, owning aggregate positions valued at $127.69 million which accounted for 3.70% of the float on March 31.
On the next page we’ll find out why Clorox Co, HollyFrontier Corp, and Vitamin Shoppe are in the spotlight this morning.