With crude oil and the broader indexes modestly in the red this morning, five companies, Bed Bath & Beyond Inc. (NASDAQ:BBBY), Valeant Pharmaceuticals Intl Inc (NYSE:VRX), ConAgra Foods Inc (NYSE:CAG), Wynn Resorts, Limited (NASDAQ:WYNN), and Lexmark International Inc (NYSE:LXK) are trending for various reasons. Let’s take a closer look at these stocks and peer into hedge fund holdings in them to see how the smart money crowd has been trading them.
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).
Bed Bath & Beyond Inc. (NASDAQ:BBBY) is 5% in the green this morning after the company reported solid earnings for the fourth quarter of fiscal year 2015. For the period, the retailer made $1.85 per share on revenue of $3.42 billion, beating estimates by $0.04 per share and $30 million, respectively. For the full fiscal year, the company earned $5.10 per share on revenue of $12.1 billion. The solid earnings weren’t the only good news for shareholders, however, as Bed Bath & Beyond Inc. (NASDAQ:BBBY) also declared a quarterly dividend for the first time, of $0.125 per share, which currently provides a dividend yield of just under 1%. 23 elite funds in our system owned about 5.8% of the retailer’s float at the end of December, a sharp decrease from 33 funds at the end of September.
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) shares have surged 6% higher on the news that the company successfully won a commitment from the majority of its financial lenders to waive a default and ease some financial restrictions on its loans. In return for the waiver, Valeant has agreed to pay an additional one percentage point in interest on more than $11 billion of its term loans. The company will also pay a 50-basis-point fee to the lenders that agreed to the waiver. The waiver should give Valeant more breathing room to right its ship and control its debt. Valeant Pharmaceuticals Intl Inc (NYSE:VRX) was in the portfolios of 83 elite funds at the end of the fourth quarter, down by five from the end of the third quarter. Bill Ackman’s Pershing Square is one of the largest shareholders of the company and now sits on its board.
On the next page, we examine why ConAgra Foods, Wynn Resorts, and Lexmark International are trending this morning.
Shares of food processor ConAgra Foods Inc (NYSE:CAG) have rallied by 1.23% in morning trading on the back of solid third quarter of fiscal year 2016 earnings. For the quarter, the food producer reported a profit of $0.68 per share, exceeding estimates by $0.10 per share, along with net sales of $2.92 billion, which also beat expectations by $60 million. In further promising news, the company’s gross margins rose by 2.6 percentage points year-over-year to 27.4%. ConAgra’s commercial foods segment sales also jumped by 6% year-over-year to $1.07 billion. Furthermore, the company completed the divestment of its private label operations to TreeHouse Foods Inc. (NYSE:THS) during the quarter. Barry Rosenstein‘s JANA Partners was one of 36 elite shareholders of the stock at the end of 2015. That was slightly down from the 38 investors in our system who were shareholders of ConAgra Foods Inc (NYSE:CAG) on September 30.
In contrast to yesterday’s action, Wynn Resorts, Limited (NASDAQ:WYNN) is almost 10% in the green after Telsey Advisory Group upgraded the stock to ‘Outperform’ from ‘Market Perform’. Telsey believes that Wynn will achieve, at minimum, the bottom end of its management’s optimistic forecast. Wynn Resorts also announced that it plans to expand its operations in Las Vegas by developing the area behind its current resorts in the Strip. The new developments will offer more family friendly attractions such as white sand beaches, aquatic features, and fireworks shows. The number of elite shareholders of Wynn Resorts, Limited (NASDAQ:WYNN) among investors in our database dropped to 30 from 34 quarter-over-quarter during the December quarter.
Every stock in today’s trending edition is in the green, as Lexmark International Inc (NYSE:LXK) shares are also 5% higher than yesterday’s close. Investors have been buying shares because Reuters reported that Lexmark could be acquired by a Chinese company named Apex Technology. Lexmark has been exploring strategic alternatives since October of last year and a sale would presumably come at a premium. Apex Technology executives will meet with Lexmark executives this month in the United States to try and work out an agreement. As with all potential M&A rumors or news, no deal is guaranteed. The number of elite funds long Lexmark International Inc (NYSE:LXK) stayed constant quarter-over-quarter at 21. Cliff Asness’ AQR Capital Management owned slightly over 1.00 million shares at the end of December.