With this weekend’s meeting in Doha being a failure and crude futures down by more than 4%, the S&P 500 and tech indexes are lower today as the correlation between the broader market and crude continues. Among the stocks trending this morning on their own news items are Morgan Stanley (NYSE:MS), PepsiCo, Inc. (NYSE:PEP), Hasbro, Inc. (NASDAQ:HAS), Netflix, Inc. (NASDAQ:NFLX), and Amazon.com, Inc. (NASDAQ:AMZN). Let’s take a closer look at what those news bites are and see how the world’s greatest investors are positioned in each stock.
At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).
Another Bank Posts Strong Quarterly Results
Morgan Stanley (NYSE:MS) shares are 1.8% in the green after the investment bank reported better-than-expected first quarter earnings. For the period, the investment bank earned a profit of $0.55 per share versus expectations of $0.46 per share. Morgan Stanley’s sales were pretty much on target, missing by just $80 million with revenue of $7.79 billion. The earnings beat was due to better-than-expected investment management and fixed income results. Book value ended the quarter at $35.34 per share and tangible book value came in at $30.44 per share. CEO James P. Gorman had this to say about the bank’s results:
“The first quarter was characterized by challenging market conditions and muted client activity. Against that backdrop, our businesses delivered stable results. While we see some signs of market recovery, global uncertainties continue to weigh on investor activity. We remain focused on executing against our priorities, helping clients navigate difficult markets while controlling our expenses and managing risk prudently.”
The number of elite funds in our database with holdings in Morgan Stanley (NYSE:MS) fell to 50 as of the end of December from 57 at the end of September.
Strong Organic Revenue Growth Pushes Pepsi to Earnings Beat
Strong beverage demand boosted PepsiCo, Inc. (NYSE:PEP)‘s business during the first quarter, as the maker of popular soft drinks reported earnings of $0.89 per share on revenue of $11.86 billion, beating earnings estimates by $0.08 per share but missing revenue expectations by $20 million. The prophesied demise of cola demand continues to be proven inaccurate, as PepsiCo, Inc. (NYSE:PEP) reported strong organic revenue growth of 3.5%, and the company’s core operating margin inched up by 165 basis points to 16.66%. Annual guidance released by the company was also solid, with management expecting organic revenue growth of 4% and core EPS of $4.66 for fiscal year 2016. The number of elite funds with holdings in PepsiCo rose by one to 58 during the fourth quarter. Ken Fisher‘s Fisher Asset Management owned 5.36 million shares at the end of March. Shares of Pepsi are up by 0.74% this morning.
On the next page, we examine why Hasbro Inc, Netflix Inc, and Amazon.com, Inc are making the news pages this morning.
Star Wars Propels Toymaker to Huge Quarter
Hasbro, Inc. (NASDAQ:HAS) soundly beat first quarter expectations with earnings of $0.38 per share on revenue of $831.2 million, versus analyst estimates of $0.24 in EPS and $777.11 million in revenue. Hasbro’s U.S. and Canadian revenue jumped by 28% year-over-year to $443.65 million, while its international revenue soared by 13% to $345.04 million. Operating margin leapt by 270 basis points to 10.3%. Issued guidance was strong, with Star Wars merchandise expected to boost revenue and CEO Brian Goldner stating that he is “very encouraged” with overall demand for 2016. 25 funds in our system owned $376.16 million worth of Hasbro, Inc. (NASDAQ:HAS)’s shares accounting for 4.50% of the float on December 31, well up from 22 funds with $250.44 million in shares on September 30. Those shares are more than 5% in the green this morning on the company’s latest results.
Wide Release of Amazon’s Video Streaming Service Has Netflix Investors Jittery
Netflix, Inc. (NASDAQ:NFLX) is getting more competition courtesy of Amazon.com, Inc. (NASDAQ:AMZN), as Amazon is now offering its video streaming service, Prime Video, for $8.99 per month to everyone, one dollar less than Netflix’s most popular plan. Prime Video was formerly only available to subscribers to Amazon’s prime membership program, which charged a fee of $99 per year. We analyzed whether Amazon’s streaming service had surpassed Netflix’s last October, with the verdict being that it had, and was only being held back by its limited availability. Amazon is also now offering its full Prime membership for $10.99 on a monthly basis with no annual contract. Netflix, Inc. (NASDAQ:NFLX) shares are 2% lower while Amazon.com, Inc. (NASDAQ:AMZN) shares are 1.17% higher on the news. Amazon was the fifth-most widely held stock among the hedge funds tracked by Insider Monkey, with 141 elite shareholders of the company at the end of December. Netflix was the 61st-most held stock among that same group of hedge funds, with 64 funds reporting holdings in the video streaming company as of the end of 2015.