The S&P 500 opened lower on Thursday as investors refocus on the weak global macro-economic picture. Among the stocks that traders are buzzing about are Facebook Inc (NASDAQ:FB), Marriott International Inc (NASDAQ:MAR), Paypal Holdings Inc (NASDAQ:PYPL), Abbott Laboratories (NYSE:ABT), and St. Jude Medical, Inc. (NYSE:STJ). Let’s take a closer look at the latest developments surrounding these stocks and see how hedge funds are positioned towards them.
While there are many metrics that investors can assess in the investment process, the hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see the details here).
Facebook Soars on Earnings Beat
Facebook Inc (NASDAQ:FB) posted $0.77 per share on sales of $5.38 billion for the first quarter of 2016, beating the consensus estimates by $0.15 and $120 million, respectively. The company’s ad revenues jumped by 57% year-over-year to $5.2 billion, while monthly active users figure inched up 15% on the year to 1.65 billion. The number of daily active users rose 16% to 1.09 billion people. Mobile was a continued strong spot for the company, with Facebook’s mobile segment comprising 82% of the total ad revenue, versus 73% seen in the first quarter of 2015. Not surprisingly, Facebook shares opened 10% higher. According to our database that contains 786 elite funds, Facebook Inc (NASDAQ:FB) was the third most popular stock, with 146 investors holding shares at the end of December, up from the 128 funds a quarter earlier.
Marriott Turns in a Strong Quarter
Marriott International Inc (NASDAQ:MAR)’s stock has inched up some 2% after the company reported first–quarter EPS of $0.87 on sales of $3.77 billion, versus expectations of $0.84 and $3.68 billion, respectively. The company’s revenue jumped 7.4% year-over-year, while the adjusted operating margin inched up by 4.0 percentage points to 52%. Adjusted EBITDA was 7% higher at $458 million. The company’s acquisition of Starwood Hotels & Resorts Worldwide is on track to close by mid-2016. For full 2016, the company expects adjusted EBITDA in the range of $1.90 billion to $1.97 billion, while for the second quarter, Marriott anticipates adjusted EBITDA between $495 million and $510 million. A total of 34 funds that we track owned shares of Marriott International Inc (NASDAQ:MAR) at the end of 2015.
On the next page, we are going to take a look at the developments that put Paypal Holdings, Abbott Laboratories, and St Jude Medical in the spotlight today.
Paypal’s Top and Bottom Lines Beat Estimates
Paypal Holdings Inc (NASDAQ:PYPL) reported an excellent first quarter and its stock has gained 3% so far today. For the time period between January 1 and March 31, PayPal reported earnings of $0.37 per share on revenue of $2.54 billion, beating analysts expectations by $0.02 per share and $40 million, respectively. Transaction revenue jumped by 17% year-over-year to $2.24 billion, while the company’s other value-added services unit saw sales rise 37% year-over-year to $306 million. Paypal is guiding for second quarter EPS in the range of $0.34 to $0.36 and full-year adjusted EPS in the range of $1.45 to $1.50, which are in-line with analyst estimates. Carl Icahn’s Icahn Capital LP owned more than 46 million shares of Paypal Holdings Inc (NASDAQ:PYPL) at the end of December.
M&A Activity in Healthcare Sector
According to a press release, Abbott Laboratories (NYSE:ABT) has agreed to acquire St. Jude Medical, Inc. (NYSE:STJ) for $46.75 in cash and 0.8708 shares of Abbott common stock for every share of St Jude. That translates to a total value of $85 per share and represents a total equity value of around $25 billion. The combined company would have a leading pipeline that will deliver a steady stream of new medical devices across the diabetes, vision, cardiovascular, and neuromodulation spaces. Abbott management expects the acquisition of St Jude to be accretive to adjusted earnings per year in the first full year after closing and to deliver annual pre-tax synergies of $500 million by 2020. Abbott will issue $3 billion of stock on the secondary market to re-balance its capital structure. 39 elite funds held Abbott Laboratories (NYSE:ABT) and 41 held St. Jude Medical, Inc. (NYSE:STJ) at the end of December. St Jude’s shares have soared 27%, while Abbott’s stock has plunged by around 7%.