Although several major companies have recently reported earnings, shares of five other companies, Clayton Williams Energy, Inc. (NYSE:CWEI), Netflix, Inc. (NASDAQ:NFLX), Tesla Motors Inc (NASDAQ:TSLA), Valeant Pharmaceuticals Intl Inc (NYSE:VRX), and SAExploration Holdings, Inc. (NASDAQ:SAEX), are trending for various reasons.
In this article, let’s examine the reasons each stock is in the spotlight and see how the smart money investors from our database were positioned towards them.
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 the details here).
Clayton Williams Energy, Inc. (NYSE:CWEI) shares have surged by 8% in extended-market trading after the company agreed to sell almost all of its assets in the Giddings Area in East Central Texas, which produced an average of 3,900 BOE per day for the quarter ended in September 30, 2016, for $400 million. The management intends to use the proceeds of the deal, which is expected to close in December, to fund development in the Delaware Basin, and to repay some debt. Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners inched up its stake by 2% in the second quarter to 790,324 shares in Clayton Williams Energy, Inc. (NYSE:CWEI) at the end of June.
Netflix, Inc. (NASDAQ:NFLX) is in the spotlight after the internet streamer up-sized its bond offering to $1 billion from $800 million. The favorite among cord-cutters intends to use the money raised to fund the creation of more content, which should help widen Netflix’s moat against competitors and bring in more subscribers. According to a press release, the 10 year notes will yield only 4.375%, which is a record low for dollar debt offerings from domestic companies with Netflix’s notes’ rating and maturity. Of the 749 elite funds we track, 54 owned $3.73 billion worth of Netflix, Inc. (NASDAQ:NFLX)’s stock, which accounted for 9.50% of the float on June 30, versus 64 and $6.66 billion, respectively, on March 31.
On the next page, we examine Tesla Motors, Valeant Pharmaceuticals Intl, and SAExploration Holdings.
Tesla Motors Inc (NASDAQ:TSLA) received some unwanted attention from Consumer Reports on Monday after the review outlet wrote that Tesla’s new Model X SUV “has been plagued with malfunctions, including its complex Falcon-wing doors”. In addition, Consumer Reports has concerns over how Tesla has deployed and marketed its semi-autonomous technology, with saying that they believe automakers “need to clearly communicate” what the systems “can and cannot do”. In better news, Consumer Reports did say that the Model S has improved to “average” reliability. The number of funds from our database with holdings in Tesla Motors Inc (NASDAQ:TSLA) fell by three quarter-over-quarter to 36 at the end of June.
Traders are keeping a close eye on Valeant Pharmaceuticals Intl Inc (NYSE:VRX) after famed value investor Bill Miller of Legg Mason Capital Management said on CNBC that he thinks Valeant could “double in three years”. Miller, in particular, likes the company’s free cash flow and bought some shares of the pharmaceutical company last week. A total of 60 funds owned shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) at the end of June, down by 11 funds from the previous quarter.
Here’s the full video of Bill Miller comments about Valeant:
Nano-cap SAExploration Holdings, Inc. (NASDAQ:SAEX) shares have spiked by 37% in extended-market trading after the company announced that it has received around $24.4 million of tax credit certificates from Alaska’s Department of Revenue. As a result of having received the tax credit certificates, SAExploration has been granted access to the remaining $15 million of funding under a senior loan facility. CEO Jeff Hastings said:
“We are very pleased that we have begun to receive tax credit certificates from the State of Alaska sooner than expected and access to the remaining $15.0 million under our Senior Loan Facility ensures our ability to progress through the receipt and monetization of the remaining tax credits. We believe the value that can ultimately be derived from these tax credit certificates, and those yet to be issued, will be highly accretive to the company and to our stockholders.”
Five funds tracked by Insider Monkey held shares of SAExploration Holdings, Inc. (NASDAQ:SAEX) valued at $74,000 in aggregate, having amassed 3.70% of the company’s float on June 30.