The S&P 500 has lost around 0.20% so far on Friday. With the majority of earnings reports released, investors have breathed a sign of relief that earnings have not deteriorated despite the weak global macroeconomic backdrop. Among the stocks trending today are Apple Inc. (NASDAQ:AAPL), Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR), InterOil Corporation (USA) (NYSE:IOC), Concordia Healthcare Corp (NASDAQ:CXRX), and TerraForm Global Inc (NASDAQ:GLBL). Let’s take a closer look at the developments that put these stocks in the spotlight and see how the world’s greatest investors are positioned in each stock.
Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 780 hedge funds and other investors, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).
Apple Makes a Big Investment
Although Apple Inc. (NASDAQ:AAPL) just hit a 52-week low yesterday, the company has plenty of cash, and now apparently a new found willingness to deploy some of the cash. News broke that Apple recently invested $1 billion in China’s most popular ride sharing app, Didi Chuxing, which is substantially bigger than Uber in China. As the rationale for the investment, CEO Tim Cook said: “we are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market”. One big reason Apple Inc. (NASDAQ:AAPL) shares have fallen is that its China sales have slowed and that the Chinese government has blocked some of Apple’s services in the country. If Apple can understand the market better and win more goodwill from the powers that be, its sales might recover. A total of 133 funds owned $17.72 billion worth of Apple stock at the end of December.
Petrobras Reports a Loss
To no one’s surprise, Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) reported a loss for the first quarter of 2016, which amounted to 1.25 billion reais or $347.5 million, versus a profit of 5.3 billion reais a year ago. When factoring in Petrobras’ float, that translates to a negative EPS of $0.02. Sales dropped 30.7% year-over-year to $17.99 billion as weak oil prices weighed on revenue. In response, the company has vowed to sell assets and reduce debt. Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) shares have more than doubled from their 2016 lows due to the crude rally. Ken Fisher’s Fisher Asset Management held over 10.0 million shares of Petrobras at the end of March.
On the next page, we examine InterOil, Concordia Healthcare Corp and TerraForm Global Inc.
InterOil Misses Expectations
InterOil Corporation (USA) (NYSE:IOC) posted a lost $0.34 per share on revenue of $0.92 million for its first quarter, missing estimates by $0.03 per share and $0.18 million, respectively. The company made progress advancing the development of the Elk-Antelope fields and successfully persuaded its creditors to extend its credit facility’s size to $400 million. InterOil pushed back its credit facility’s deadline to the end of 2017. Shares of InterOil Corporation (USA) (NYSE:IOC) are roughly flat year to date and the stock was included in the equity portfolios of 13 funds from our database at the end of 2015.
Concordia’s Earnings Dissapoint
Concordia Healthcare Corp (NASDAQ:CXRX)’s first-quarter earnings didn’t meet expectations as the company turned in EPS of $1.35 on revenue of $228.54 million, versus estimates of $1.52 in EPS and $231 million in revenue. Nevertheless, Concordia plans to continue its strategy of launching new products, with the company expecting to launch 60 or more products over the next three years. Partly due to product launches, the company reaffirmed its 2016 guidance of $1.02 billion to $1.06 billion in revenue and $610 million to $640 million in adjusted EBITDA. The hedge fund sentiment towards Concordia Healthcare Corp (NASDAQ:CXRX) has been stable, with the number of top fund holders with positions in the stock rising by one quarter-over-quarter to 18 at the end of December.
TerraForm Global Recieves a Notice of Default
Holders of the yieldco’s 9.75% senior notes due in 2022 recently sent TerraForm Global Inc (NASDAQ:GLBL) a notice of default after the company failed to submit its annual report. Under financial rules, TerraForm Global has 90 days to issue its report, or the company will be forced to repay hundreds of millions of dollars of debt years earlier. One reason TerraForm Global Inc (NASDAQ:GLBL) has failed to file is because its parent, SunEdison, hasn’t filed it yet either. A total of 21 funds that we track held shares of TerraForm Global heading into 2016.