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Schlumberger Limited. (SLB) Posts Beat Despite Sharp Revenue Fall

Schlumberger Limited. (NYSE:SLB) reported its latest quarterly earnings after the markets closed on Thursday, and its performance for the second quarter of 2015 exceeded expectations. The oil and gas exploration and production industry services firm revealed that it earned $0.89 per share on revenues of $9.01 billion, beating forecasts of $0.79 EPS on revenues of $8.97 billion. Revenue, however, declined sharply by 25% year-over-year, weighed down by pricing slumps and lesser activity in inland locations in North America, woes which were clearly anticipated by analysts. Schlumberger Limited. (NYSE:SLB) reported North America revenues decreased by 39% year-over-year and 27% quarter-over-quarter to $2.36 billion for the most recent quarter. International revenue declined by 19% versus the same period a year ago, and by 5% from the first quarter to $6.53 billion.

Schlumberger Chairman and CEO Paal Kibsgaard pointed out, however, that, “Despite the much more challenging market conditions, overall pretax operating margins were maintained at levels well above the previous downturns as we continued to proactively manage costs and resources, carefully navigate the commercial landscape, and further accelerate our transformation program. The success of our efforts can be seen in pretax operating margins of 10.2% in North America and 24.5% internationally while generating $1.5 billion in free cash flow, representing 132% of earnings.”

 Schlumberger Limited. (SLB), NYSE:SLB, Yahoo Finance,

The declines experienced by Schlumberger Limited. (NYSE:SLB) despite the top line and bottom line beats were in-line with hedge fund sentiment in the first quarter. Hedge fund holdings in the company among those we track declined by 14.04% during the first quarter to $1.79 billion. The stock declined by only 2.31% during that period. Additionally, heading into the second quarter, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, down significantly by 17 from the end of the fourth quarter. Nonetheless, Schlumberger did post modest gains of over 2% in the second quarter, though it has since given most of them back in July.

Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 139% over the last 34 months, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).

Insider Monkey also tracks insider moves in companies such as Schlumberger Limited. (NYSE:SLB) to see whether executives inside these companies are confident in their firms’ shares. Whereas there have been no purchases made by insiders recorded so far this year, there have been a few sales. Director Tore Sandvold sold 2,000 shares of the firm on June 26. He previously sold 6,750 shares of the firm as well, on June 2. Vice President Mark Danton sold 5,184 shares of the firm on April 22 after selling 3,373 shares a day earlier.

Keeping these factors in mind, we’re going to go over the fresh smart money activity regarding Schlumberger Limited.

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