Wednesday has been a good day for many investors, as the Dow Jones is up by 78 points and the S&P is up by almost 6 points. Both the Dow and the S&P 500 are above key technical levels, with the Dow above 18,000 and the S&P above 2,100. Among the stocks well in the green today are Teck Resources Ltd (USA) (NYSE:TCK), Bonanza Creek Energy Inc (NYSE:BCEI), Helix Energy Solutions Group Inc (NYSE:HLX), Cloud Peak Energy Inc. (NYSE:CLD), and MaxLinear, Inc. (NYSE:MXL). Let’s take a closer look at why and see how hedge funds are positioned in each stock.
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Teck, Bonanza, and Helix Surge on Higher Crude Prices
Teck Resources Ltd (USA) (NYSE:TCK), Bonanza Creek Energy Inc (NYSE:BCEI), and Helix Energy Solutions Group Inc (NYSE:HLX) have each surged today due to rising crude prices. Today’s EIA numbers showed a 2.1 million-barrel increase in crude inventories last week, better than both the API’s estimate of 3.1 million barrels of inventory and analysts’ expectations of 2.4 million barrels. The EIA numbers also showed a 3.6 million-barrel drop in distillates versus the expected 0.3 million-barrel increase. The bullish numbers were enough to send energy prices higher despite the oil workers strike in Kuwait ending. Near month WTI futures rose more than $2 per barrel to $43.88 at the time of writing, while Brent futures have pierced through the $45 per barrel mark.
Although it isn’t a major oil producer, Teck Resources Ltd (USA) (NYSE:TCK) owns 20% of the billion-dollar Fort Hills oil sands project, which becomes more cost competitive the higher crude prices go. 15 elite funds that Insider Monkey tracks in its database owned 1.6% of the company’s float at the end of December. Shares of Teck are 9.6% higher on the day.
Given that Bonanza Creek Energy is an independent energy E&P, the company benefits when WTI goes higher. That fact isn’t lost on traders, who have bid the stock up by over 19% on Wednesday. A short squeeze could also be playing a part, as almost one-third of Bonanza Creek Energy Inc (NYSE:BCEI)’s float is short. Jim Simons‘ Renaissance Technologies was among the major shareholders of Bonanza, with a stake of over 1.00 million shares at the end of the fourth quarter.
In addition to the higher crude prices, Helix Energy Solutions Group Inc (NYSE:HLX) shares are up 9% today after reporting better-than-expected first quarter earnings. For the January 1-to-March 31 period, Helix lost $0.26 per share, which beat estimates of a loss of $0.28 per share. Revenue for Helix missed expectations by $14.19 million, however. CEO Owen Kratz commented on the results in a press release:
“We expected the first quarter to be the low quarter in 2016 due to continuing weak industry conditions combined with typical seasonal factors. Going forward, we expect to see improved financial performance for the remaining quarters due to the commencement of the Q5000 contract and the normal seasonal pick up in well intervention activity in the North Sea.”
Cliff Asness’ AQR Capital Management owned 438,552 Helix shares at the end of 2015.
On the next page we examine why Cloud Peak Energy and MaxLinear are also making big moves upward today.
Traders Becoming More Optimistic on Cloud Peak
Cloud Peak Energy Inc. (NYSE:CLD) is perhaps indirectly benefiting from the higher crude prices. Although it doesn’t produce oil or gas, coal prices could rise if gas prices rise. Natural gas prices have increased recently from their lows and could benefit from the higher crude prices if the perceived correlation between the two strengthens. Given that one-quarter of Cloud Peak Energy Inc. (NYSE:CLD)’s shares are short, a short squeeze might also have something to do with today’s rally. Ten funds that Insider Monkey tracks owned 8.9% of Cloud Peak’s shares as of December 31.
MaxLinear Ups Guidance
MaxLinear, Inc. (NYSE:MXL) shares have rallied by 7.44% today after the company positively revised its first quarter outlook. MaxLinear anticipates its gross profit percentage to exceed prior guidance by around 200 basis points and for operating expenses to be $1 million less than previously indicated. Revenue for the quarter is still expected to be between $102 million and $103 million. Management offered the following commentary in a press release disclosing the update:
“As we have seen strength across our business with continued strong booking trends, we are pleased to reiterate our revenue outlook for the first quarter 2016. Additionally, continued supply chain efficiencies, particularly in our Entropic business, favorable mix, and tight expense control yielded better-than-expected gross profit and operating expense results.”
George Soros’ Soros Fund Management owned more than 1.3 million shares of MaxLinear, Inc. (NYSE:MXL) at the end of the fourth quarter.