Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Two Stocks Heading In Different Directions Following Earnings Reports And The One Hedge Funds Love More

With earnings season gathering pace, shareholders of Monsanto Company (NYSE:MON) were dealt a blow today, as the company’s 2015 fiscal fourth quarter earnings missed Wall Street expectations. As a result, the stock opened 4.8% lower today, but has turned north during the first hour of trading. Constellation Brands, Inc. (NYSE:STZ)‘s shareholders should be in a better mood, as the company’s latest financial figures have surpassed analyst expectations and boosted the stock price, with shares having opened up by 3.2% today. Hedge funds have mixed feelings towards these stocks, with Monsanto having an edge over Constellation Brands.

agriculture-89168_1280 LNN

Analysts were expecting Monsanto Company (NYSE:MON) to announce a loss of $0.02 per share and sales of $2.8 billion, and have been taken aback by the figures from the company’s report: sales of $2.4 billion, down by 10% year-over-year, and a loss of $1.06 per share. Adjusted for one-time gains and costs, the loss per share was just $0.19, an improvement from the loss of $0.31 per share posted a year ago. The bad news does not end there, as Monsanto revealed plans to cut up to 2,600 jobs in the next 18-to-24 months as part of its ongoing cost-reduction program. Its management has also decided to accelerate its $3 billion share buyback program as it pushes for a 20% growth in earnings per share by the end of fiscal 2017.

Follow Monsanto Co W (NYSE:MON)
Trade (NYSE:MON) Now!

Monsanto Company (NYSE:MON)’s popularity among the hedge funds that we track significantly increased during the second quarter, as the number of funds holding long positions increased to 64, from 54 at the end of March. Their cumulative positions account for 7.10% of the company’s common stock and were valued at $3.54 billion at the end of June, up by 20% during the quarter. Larry Robbins is a big fan of Monsanto, which was among his top five stock picks heading into the third quarter. During the April-to-June period, Robbins increased his investment in the company by 15% to a little over 11.0 million shares. Fir Tree, founded by  Jeffrey Tannenbaum, is also bullish on the stock, having boosted its stake by 15% to amass 2.28 million shares. Alan Fournier does not share their conviction, though, having cut his holding of Monsanto by 8% to 2.16 million shares, according to Pennant Capital Management’s latest 13F filing.

We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about six basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated ten percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 60 percentage points (118% return vs. S&P 500’s 57.6% gain) over the last 36 months (see the details here).

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.