With the earnings season in progress, a number of stocks are registering significant moves on the back of earnings releases and other news. One of them, Ambarella Inc (NASDAQ:AMBA), opened 7% lower on Thursday, while Lifelock Inc (NYSE:LOCK), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), InvenSense Inc (NYSE:INVN), and Hanesbrands Inc. (NYSE:HBI) are gaining ground in the first hours of trading. Let’s take a closer look at the developments that have set these stocks into motion today.
We will also look at what the investors from our database think about some of these companies. By looking at the hedge fund sentiment we have determined that a retail investor can beat the market over the long-term. However, the key is not to look at the stocks that hedge funds are collectively the most bullish on, since these stocks are mainly represented by large- and mega-cap companies, which are more efficiently priced and are more widely covered. The key is to focus on the top small-cap ideas of hedge funds. Our strategy involves imitating the 15 most popular small-cap stocks among over 700 hedge funds and it has returned 102% since August 2012, beating the market by some 53 percentage points (see more details here).
Let’s start with Ambarella Inc (NASDAQ:AMBA), the only loser of the five-stock lot covered in this article, whose shares have declined by over 7%, not on the back of its earnings, but after GoPro Inc (NASDAQ:GPRO) released its financial results for the third quarter. Ambarella Inc (NASDAQ:AMBA) is one of the key chip suppliers for GoPro, therefore both stocks are very correlated. After GoPro missed estimates for the third quarter (see the details here) and its stock tanked by over 16%, Ambarella’s shares were also expected to take a hit as the demand for GoPro’s action cameras is falling. The sentiment among hedge funds towards Ambarella is also weak, with only 26 investors from our database reporting stakes equal to 13% of the company as of the end of June. Meanwhile, Louis Navellier‘s Navellier & Associates added 159,613 shares to its stake in Ambarella Inc (NASDAQ:AMBA) during the third quarter, as it reported holding 182,070 shares in its latest 13F.
On the other hand, Lifelock Inc (NYSE:LOCK)‘s stock has soared by over 46% on the back of its most recent financial results as well as a settlement with the Federal Trade Commission. The provider of theft protection posted revenue of $151.95 million and adjusted net income of $0.28 per share, which were above the $123.03 million and $0.16 per share respectively that it delivered a year earlier. Moreover, the results were better than the EPS of $0.25 and revenue of $147.36 million expected by the Street. The settlement with the FTC is related to Lifelock Inc (NYSE:LOCK)’s past marketing representations and information security programs. At the end of June, 23 funds from our database held around 7.90% of Lifelock Inc (NYSE:LOCK)’s outstanding stock. In addition, Billionaire Ken Fisher‘s Fisher Asset Management reported holding 335,998 shares of Lifelock as of the end of September.
On the following page we will discuss the three other stocks that surged on the back of solid quarterly results.
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is one of the winners in the biotech industry as its stock has opened around 5% in the green on Thursday. Its revenue jumped by over 70% on the year to $309.82 million in the third quarter, boosted by strong sales of Kalydeco and Orkambi, two drugs for the treatment of cystic fibrosis. The company also narrowed its adjusted earnings per share loss to $0.13 from $0.37. Analysts expected Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) to report a loss of $0.28 per share on revenue of $245 million. Among the funds we track, Vertex is fairly popular, being included in the equity portfolios of 45 investors, though they held less than 4% of its outstanding stock at the end of June.
InvenSense Inc (NYSE:INVN)‘s stock has also jumped by over 15% on the back of its financial results for the firm’s second quarter of fiscal year 2016, ended September 27. The company posted net revenue of $112.55 million, up from $90.20 million a year earlier and non-GAAP EPS of $0.16, versus $0.05 delivered a year ago. Both the top and bottom line results came in better than the $0.15 in EPS and $111.2 million in revenue expected by analysts. Even though the number of funds with long positions in InvenSense went up by nine to 20 during the second quarter, smart money investors are still a bit cautious about InvenSense Inc (NYSE:INVN)’s prospects as they held just 5.40% of its outstanding stock at the end of June.
Finally, shares of Hanesbrands Inc. (NYSE:HBI) have gained around 10% so far today after the company said that it had achieved its seventh-straight quarter of record results. Its revenue amounted to $1.59 billion, up by 13.6% year-over-year, while its adjusted EPS went up by 16% to $0.50. Analysts had expected EPS of $0.50 on revenue of $1.57 billion. While Hanesbrands Inc. (NYSE:HBI) lowered its full-year guidance to $5.85 billion in net sales from $5.9 billion, it raised its adjusted EPS guidance to a range of $1.66-to-$1.68 from $1.61-to-$1.66. Navellier & Associates reported ownership of 999,206 shares of Hanesbrands as of the end of September.