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Western Digital Corp (WDC) Shares Up Despite Revenue Miss

The shares of Western Digital Corp (NASDAQ:WDC) closed 9.77% higher today after the company posted better-than-expected earnings per share for its fiscal fourth quarter of 2015. The data storage company was able to beat the markets’ earnings estimate of $1.46 with non-GAAP EPS of $1.51. The reported EPS was in-line with, though on the lower end of Western Digital Corp (NASDAQ:WDC)’s earlier guidance of $1.50 to $1.60 per share. However, the company did miss Wall Streets’ revenue estimates of $3.32 billion with reported revenues of $3.19 billion, and its revenue was down by 12.6% on a year-over-year basis. The quarterly revenues were also lower than the earlier guidance of $3.3 billion to $3.4 billion released by Western Digital Corp (NASDAQ:WDC). Steve Milligan, CEO of Western Digital, said, “I am satisfied with our execution and performance in the fourth fiscal quarter in light of the weak PC market.” The storage firm announced quarterly revenue guidance of $3.2 billion to $3.3 billion for the first quarter of fiscal 2016 along with EPS expectations of $1.50 to $1.60.


It has been a difficult year so far for Western Digital Corp (NASDAQ:WDC)’s stock, with its shares declining by 22.96% year-to-date. The smart money tracked by Insider Monkey maintained a bullish outlook on the storage product company during the first quarter. Among the hedge funds tracked by Insider Monkey, 56 had positions in Western Digital, with total investments of $1.81 billion. Both the aggregate investments and number of hedge fund managers investing in the company grew during the first quarter in comparison with the total investments of $1.69 billion from 46 hedge fund managers in the previous quarter. It is important to consider that the shares of Western Digital Corp (NASDAQ:WDC) were down by 17.79% in the first quarter, which makes the increase in aggregate investments even more notable.

We don’t just track the latest moves of funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research, with backtests for the period between 1999 and 2012 and forward testing for the last 2.5 years. The results of our analysis show that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests. Moreover, since the beginning of forward testing in August 2012, the strategy worked brilliantly, outperforming the market every year and returning 123%, which is more than 66 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).

Unlike hedge funds, the majority of insiders making transactions were opting to sell off their stakes in the company with at least 37 insider sales conducted in 2015. Mr. Milligan himself sold 60,779 shares of the company in 2015, with the most recent sale taking place on June 26 and consisting of the sale of 400 shares.

Considering that hedge funds had a positive outlook of the company, let’s take a gander at the fresh action surrounding Western Digital Corp. (NASDAQ:WDC).

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