With markets flat after the bell on Wednesday, investors are focused on individual stocks that are reporting their earnings for the previous quarter. Earnings reports usually have a more significant impact on an individual stock than more general news. In this article, we will cover five stocks that are trending in the first hours of trading on the back of earnings reports, as well as other news. In addition, we will look at the hedge fund sentiment towards these stocks in order to understand where you should go amid the hype.
At Insider Monkey we analyze the hedge fund sentiment of around 730 investors based on their quarterly 13F filings. This allows us to see in which stocks these investors prefer to put their faith and money and identify profitable opportunities. Hedge funds usually operate with a lot of capital and have to thoroughly research each one of their investments, while their focus on long-term gains allows us to emulate them. We have determined that imitating hedge funds’ 15 most popular small-cap picks can generate monthly returns of around one percentage point above the market. This approach helped us generate returns of 102% in the last three years, which is 53 percentage points higher than the gains delivered by the S&P 500 ETF (SPY) (see more details here).
Let’s start with Lam Research Corporation (NASDAQ:LRCX), whose stock has advanced by nearly 6% so far today, after the company reported its financial results for the most recent quarter and announced an acquisition. The company posted adjusted EPS of $1.82, beating the estimates of $1.71. Its revenue advanced to $1.60 billion from $1.15 billion a year earlier. Moreover, the company announced that it expects adjusted net income per share of around $1.42 for the current quarter. In another statement, Lam Research Corporation (NASDAQ:LRCX) announced the acquisition of KLA-Tencor Corp (NASDAQ:KLAC) for $10.6 billion. The smart money is optimistic about Lam Research Corporation (NASDAQ:LRCX)’s potential, as 48 funds from our database reported stakes equal to 9.80% of the company as of the end of June. Among them, billionaires Ken Griffin of Citadel Investment Group and David Einhorn of Greenlight Capital held the largest stakes, containing 1.96 million shares and 1.64 million shares, respectively.
Next in line is EMC Corporation (NYSE:EMC), whose shares have slid by over 5% on Wednesday after it announced a 1% annual increase in revenues to $6.08 billion and adjusted earnings of $0.43 per share, down from $0.44 a year earlier. Moreover, the company’s EPS missed the consensus estimate by $0.01. EMC announced earlier that it was being taken over by Dell, in a deal worth $67 billion (see more details here). During the second quarter, the number of funds with long positions in EMC Corporation (NYSE:EMC) declined by seven to 54, while the aggregate value of their stakes was equal to 5% of the company’s outstanding stock. Paul Singer’s Elliott Management held 33.6 million shares of EMC Corporation (NYSE:EMC) at the end of June.
On the following page, we are going to discuss two tech stocks that are down on the back of analyst downgrades and one micro-cap biopharmaceutical stock.