The markets are rising on Wednesday, with the S&P up by about 0.55%, the NASDAQ up by roughly 1.2% and the Dow almost flat (though very slightly down). Among the stocks driving the surges in the markets, investors can count Trimble Navigation Limited (NASDAQ:TRMB), Open Text Corporation (USA) (NASDAQ:OTEX), Prospect Capital Corporation (NASDAQ:PSEC), Nuance Communications Inc. (NASDAQ:NUAN), and Criteo SA (ADR) (NASDAQ:CRTO) as some of the main drivers. But, what’s behind the substantial gains seen in these stocks today? And, how do hedge funds feel about these companies? Let’s find out.
An everyday investor doesn’t have the same resources and capabilities to analyze different publicly-traded companies as hedge funds do. This is why it is a good idea to see what stocks hedge funds like the most and try to imitate some of their bullish moves in an attempt to reap market-beating returns. At Insider Monkey, we follow the activity of several hundred of the best-performing hedge funds as part of our strategy. We analyze their 13F filings and use the data to see what stocks they are collectively bullish on. Through extensive research we have determined that the best approach to outperform the broader indices is to follow hedge funds into their top small-cap ideas. In our backtests, a portfolio of the 15 most popular small-cap stocks generated monthly alpha of 81 basis points, versus 0.7 percentage points posted by hedge funds’ top large- and mega-cap picks (see more details here).
Back to the stocks that interest us, we’ve got Trimble Navigation Limited (NASDAQ:TRMB), up by more than 16.3% in Wednesday trading following the announcement of the company’s fourth quarter financial results. After the market closed on Tuesday, the firm posted the results, which amounted to earnings of $0.27 per share, $0.02 above the consensus estimate, on revenue of $559.7 million, which also beat the Street’s expectations of $540.87 million. Also helping the stock’s gains was an upgrade by Needham, which boosted its rating on the stock to ‘Buy’ and set a $24.00 price target on it.
Hedge funds seem to be increasingly bullish on Trimble Navigation Limited (NASDAQ:TRMB). Among the over 730 funds that we keep track of, 25 disclosed long positions in the company as of the end of the third quarter of 2015, up by 38.8% quarter-over-quarter.
Open Text Corporation (USA) (NASDAQ:OTEX) is also surging on its earnings report, trading up by more than 10.6% in the early afternoon. After the bell rang on Tuesday, the software products and services provider announced earnings of $1.01 per share on revenue of $465.35 million for its second quarter of fiscal year 2016, well above the Street’s consensus of $0.90 per share and $459.53 million respectively.
No doubt pleased with the news is Israel Englander, as his fund, Millennium Management, disclosed ownership of 337,848 shares of Open Text Corporation (USA) (NASDAQ:OTEX) as of September 30.
On the next page, we will look into the events driving the spikes in Prospect Capital Corporation (NASDAQ:PSEC), Nuance Communications Inc. (NASDAQ:NUAN), and Criteo SA (ADR) (NASDAQ:CRTO).