Stock futures are trading flat this morning as the markets look to retouch or build on their all-time highs. Investors will be closely monitoring the latest quarterly results out of several companies today, including Coach Inc (NYSE:COH) and Walt Disney Co (NYSE:DIS). Investors will also be monitoring oil today ahead of the release of U.S. output data tomorrow. Energy was the top performing sector yesterday, but oil has dipped this morning.
Among the other companies of interest today are five which reported their earnings after the closing bell yesterday. They are LendingClub Corp (NYSE:LC), MaxLinear, Inc. (NYSE:MXL), Rackspace Hosting, Inc. (NYSE:RAX), Nortek Inc (NASDAQ:NTK), and Nuance Communications Inc. (NASDAQ:NUAN). We’ll take a look at how they performed in this article and see if hedge fund sentiment did well in predicting that performance.
Through extensive research that covered the portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).
More Pain for LendingClub As Earnings Miss, CFO Steps Down
LendingClub Corp (NYSE:LC) shares are down by nearly 2% in pre-market trading after the release of the online finance company’s second quarter results yesterday. Earnings amounted to a loss of $0.09 per share, widely missing estimates of a loss of $0.02, while sales topped estimates by $1 million, tipping the scales at $102 million. Perhaps even more distressing to investors was the revelation of further leadership turmoil at the company, as CFO Carrie Dolan will step down. It should be noted that Ms. Dolan was planning to step down earlier this year, before former CEO Renaud Laplanche was forced to resign in May after it came to light that he improperly boosted the company’s results through a slew of personal loans taken out by him and his family.
Raging Capital discussed its LendingClub short in its second quarter letter to investors, declaring that while the improper actions of its former CEO were not part of its short thesis, they do underscore the broader issues being faced by the company. Alexander Tamas’ Vy Capital has 4.50 million shares of LendingClub Corp (NYSE:LC) in its portfolio as of June 30.
MaxLinear Falling Sharply On Weak Guidance
It may be awhile before MaxLinear, Inc. (NYSE:MXL) retouches its 52-week high, as shares of the company are getting battered by more than 15% in extended trading this morning. Second quarter results were solid, with adjusted earnings of $0.50 topping analysts’ consensus estimate by $0.06, while revenue of $101.7 million was in-line with expectations. However, third quarter guidance left something to be desired, as the chipmaker guided for sales of $94 million-to-$98 million, well beneath expectations of $104.2 million. MaxLinear, Inc. (NYSE:MXL) was in the portfolios of 26 of the hedge funds tracked by Insider Monkey as of March 31, down by three quarter-over-quarter.
We’ll see how Rackspace, Nortek, and Nuance performed in the June quarter on the second page.
Rackspace Guidance Also Disappoints
The hedge funds in our database were also selling out of Rackspace Hosting, Inc. (NYSE:RAX) and several other cloud computing stocks during the first quarter. That has proven to be unwise in Rackspace’s case, as its shares have gained over 30% since March 31, largely from the recent takeover rumors surrounding it. Shares have dipped by 2% in pre-market activity however, as tepid guidance offset solid second quarter results reported yesterday. Adjusted earnings for the quarter came in at $0.38, trouncing estimates of $0.22, while revenue of $523.6 million also slightly topped estimates and represented a 7% year-over-year increase. However, third quarter guidance for sales of $510 million-to-$515 million came in below estimates of $525 million. Paul Hondros’ AlphaOne Capital Partners initiated a 120,400-share stake in Rackspace Hosting, Inc. (NYSE:RAX) during the first quarter.
Weak Results Out of Nortek
Nortek Inc (NASDAQ:NTK) widely missed top- and bottom-line estimates with its second quarter results yesterday, as its EPS of $1.14 and revenue of $685.10 million came $0.27 and $30.10 million short of expectations respectively. The heating and air conditioning company’s shares have been unaffected by the poor results this morning however, as it’s poised to be acquired by Melrose Industries for $2.8 billion. Shares of Nortek did slip slightly yesterday as the window shopping period of its proposed deal expired without any other offers, removing any possibility of a bidding war for the company. Jeffrey Gates‘ Gates Capital Management owned 3.11 million shares of Nortek Inc (NASDAQ:NTK) on March 31, valued at over $150 million.
Nuance Communications Wraps Solid Quarter
Nuance Communications Inc. (NASDAQ:NUAN) shares are up modestly this morning following the announcement of its third quarter of fiscal year 2016 results yesterday. The voice recognition and language solutions company delivered adjusted earnings of $0.38 for the fiscal quarter, beating estimates by $0.01, while its top-line of $484.90 million missed estimates of $490.40 million. Non-GAAP operating margin improved by 80 basis points year-over-year, while non-GAAP EPS experienced a $0.06 improvement. Nuance announced the acquisition of TouchCommerce on July 21, and believes that its digital customer service solutions will integrate effectively with its own offerings to help meet the varied service needs of its customers. Columbus Circle Investors held a 2.77 million-share position in Nuance Communications Inc. (NASDAQ:NUAN) on June 30, having cut the size of its position by 35% during the second quarter.