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Alphabet (GOOG), Pfizer (PFE) And Three Other Blue Chips Report Earnings: See How Investors Are Playing Them

U.S. investors are still using the oil market as a guide for their trading activities, so it’s little wonder that the main indices plunged together with oil prices today. Mixed earnings results did not help, as the Dow fell by more than 250 points during the first hours of trading. In this article we’ll take a look at the earnings reports of Alphabet Inc (NASDAQ:GOOGL), Dow Chemical Co (NYSE:DOW), Mallinckrodt PLC (NYSE:MNK), Pfizer Inc. (NYSE:PFE), and Ally Financial Inc (NYSE:ALLY) and how investors have reacted to the numbers.

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 more details here).

Alphabet Inc (NASDAQ:GOOGL) shares are up this morning after the company’s latest quarterly report beat analyst estimates. The parent company of Google released its fourth quarter results yesterday after the closing bell, reporting revenue of $21.33 billion and a profit of $8.67 per Class A share. Analysts, meanwhile, had predicted $8.10 per Class A share on the back of $20.77 billion in revenue. Sales rose by 18% year-over-year, spurred by Google’s core businesses: web search, YouTube and its Android mobile operating system. Alphabet also announced that it will increase its share buyback program by another 514,000 shares. The stock jumped in after-hours trading by nearly 9% within minutes of the earnings report, making Alphabet the most valuable U.S company. Shares are currently up today by 5%.

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Hedge funds from our database love Alphabet Inc (NASDAQ:GOOGL), as 129 of them reported ownership of its Class A shares as of September 30, while 119 of them reported holding Class C shares (NASDAQ:GOOG) (there is some overlap of investors among the two classes of shares). Tiger cub Andreas Halvorsen is one of Google’s biggest fans, with his fund Viking Global holding 2.53 million Class A shares and 1.12 million Class C shares at the end of the third quarter.

Shares of Dow Chemical Co (NYSE:DOW) are up by a little over 1% following better-than-expected fourth quarter results. The company posted a profit of $0.93 per share, easily beating Wall Street’s estimate of $0.70 per share. Revenue came in at $11.46 billion, topping analysts’ expectations of $11.24 billion. One key factor for such a good performance was the weakness in the energy market, which allowed Dow Chemical to save a lot on the oil it acquired as raw material.

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Among the funds we follow, Dan Loeb‘s Third Point stands out as a result of its activist efforts to convince the management of Dow Chemical Co (NYSE:DOW) that breaking the company up would enhance shareholder value. Dow is currently in the midst of a merger process with E I Du Pont De Nemours And Co (NYSE:DD), after which the newly created entity will break up into three separate companies. In general, hedge funds tended to distance themselves from Dow Chemical during the third quarter, with the total number of long positions dropping to 56 from 65 during the quarter.

The shares of Irish pharmaceutical giant Mallinckrodt PLC (NYSE:MNK) are also surging this morning as investors gained confidence following the company’s latest quarterly report. After yesterday’s closing bell, the stock was down by more than 15% since the start of the year. Today the stock has regained some of the lost ground, advancing by as much as 9.6%. Back to the earnings report: Mallinckrodt registered $914.8 million in revenue and a profit of $2.09 per share for the first-quarter of fiscal year 2016. Analysts, on the other hand, were expecting just $1.81 in earnings per share and revenue of $905.7 million. Mallinckrodt’s management used the opportunity to update their fiscal year 2016 guidance, with them now expecting earnings in the range of $7.85 to $8.30 per share, having previously projected $7.70-to-$8.20 per share.

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At the end of September, roughly 21% of Mallinckrodt PLC (NYSE:MNK)’s common stock was held by 40 top hedge funds in our database, down from 43 a quarter earlier. Billionaire John Paulson holds a significant position in this company, with his fund, Paulson & Co, having reported ownership of 6.59 million shares in its latest 13F filing.

Head over to the next page to see how investors reacted to the latest numbers reported by Pfizer and Ally Finance.

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