After a very strong start to the week, stocks are down on Thursday after the European Central Bank (ECB) left interest rates unchanged and did not announce any stimulus measures. Also weighing on the main U.S stock indexes are a bunch of earnings calls, with the results generally being mixed; overall, the S&P is down 0.25%, the Dow 0.27%, and the Nasdaq 0.05%. However, a few stocks are on the rise on Thursday’s early afternoon. Among them, we can count Core Laboratories N.V. (NYSE:CLB), PTC Inc (NASDAQ:PTC), KCG Holdings, Inc. Class A (NYSE:KCG), and Westlake Chemical Corporation (NYSE:WLK). Let’s take a look into what is pushing these shares upwards, and into what the hedge funds in our database think about these companies. In addition, we will look into Sunedison Inc (NYSE:SUNE), the trading of which has been halted after the company filed for Chapter 11 Bankruptcy Protection.
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 more details about our small-cap strategy).
Core Laboratories N.V. Sees “V-Shaped” Recuperation for Oil
Let’s start with Core Laboratories N.V. (NYSE:CLB), which is up by 4.9% on Thursday afternoon, driven by the announcement of the company’s first quarter financial results. Earnings of $0.37 per share were in-line with the Street’s consensus, while revenue of $153.7 million, down by 28.1% year-over-year, missed estimates by $4.76 million. Guidance for the second quarter was also pretty much in-line with expectations, with management projecting EPS of $0.34-to-$0.36 and sales of $145 million-to-$150 million, versus analysts’ consensus of $0.36 and $148.8 million respectively. So, what is driving the stock up? Well, apparently, the company believes there is only one more quarter of struggling on the horizon. After the second quarter, a “V-Shaped” recovery will be seen in the oil market, and this will certainly help the company’s results, management explained.
Core Laboratories N.V. (NYSE:CLB) counted 20 hedge fund supporters among those we track as of the end of 2015. Among them was John W. Rogers’ Ariel Investments, which disclosed ownership of 282,149 shares of the company.
PTC Surges on Strong Guidance
Next up is PTC Inc (NASDAQ:PTC), which is up by 7.4% in Thursday trading, even though its second quarter financial results for fiscal year 2016 missed estimates on Wednesday afternoon. EPS of $0.23 came in $0.14 short of expectations, while revenue of $273.69 million missed consensus by $18.53 million. What seems to be driving the surge in the stock price is the full fiscal-year guidance provided by the company’s management; PTC projects fiscal year 2016 EPS of $1.52-to-$1.62, well above the Street’s consensus of $1.34, while estimating revenue will total $1.16 billion-to-$1.78 billion, versus estimates of $1.20 billion.
35 funds among those we keep track of were long PTC Inc (NASDAQ:PTC) by the end of the fourth quarter. Their combined stakes accounted for 20% of the company’s total outstanding shares.
We look into the plight of SunEdison on the next page, as well as the sunnier performances of KCG and Westlake.
KCG Holdings Beats Estimates
KCG Holdings, Inc. Class A (NYSE:KCG) shares are trading up by almost 6.3% this afternoon, reacting to the announcement of the company’s first quarter financial results this morning. EPS of $0.41 came in $0.19 above the Street’s consensus, while revenue of $345.42 million handily beat estimates of $310 million in sales. The results were somewhat boosted by $9.5 million of other income, mainly derived from the sale of certain assets and gains on repurchases of the firm’s debt. In addition, KCG Holdings, Inc. Class A (NYSE:KCG)’s management announced an expanded stock repurchase program of up to $200 million of common stock and warrants.
16 funds in our database held long stakes in KCG at the end of 2015, with their stakes accounting for 7.5% of the company’s float.
Westlake Spikes on Bullish PVC Market Projections
Another gainer on Thursday is Westlake Chemical Corporation (NYSE:WLK). The smid-cap chemicals manufacturer said on Wednesday that it will release its first quarter financial results prior to the market open on May 3. However, it is not company-specific news that seems to be driving the spike in the stock price. According to a new study by Grand View Research, the global Polyvinyl Chloride (PVC) market (in which Westlake has a very strong position) is expected to reach $79.11 billion by 2020, on the back of surging construction and infrastructure spending in Latin America and the Asia Pacific region.
29 funds in our database were long Westlake Chemical Corporation (NYSE:WLK) as of December 31, owning 8.5% of the company’s shares at that time.
Chapter 11: SunEdison’s Bankruptcy
Finally, there’s Sunedison Inc (NYSE:SUNE), which was down by about 0.33% before the stock was halted for trading early this morning. In a move that did not surprise investors at all, the solar energy company filed for Chapter 11 bankruptcy protection. Once the largest and fastest growing solar energy company in the U.S, SunEdison embarked on an acquisition spree that built up its debt to roughly $16.1 billion as of September 30, while assets only reached $20.7 billion. “It was financial maneuvering that turned SunEdison into a hedge fund darling, but that also led to its failure,” a Forbes article explained.
Sunedison Inc (NYSE:SUNE) counted 50 hedge fund backers at the end of the fourth quarter of 2015, with their positions accounting for almost 32% of the company’s float. One notable investor was David Einhorn’s Greenlight Capital, which disclosed ownership of 18.6 million shares as of the end of 2015. However, it should be noted that the fund trimmed its exposure to the company during 2016, declaring a holding of 11.33 million shares as of last Monday.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned in this article.