On the third day of the week that kicks of the first quarter earnings seasons, all three indexes are higher and crude oil is threatening to make another monthly high. Leading the way among the green stocks are Micron Technology, Inc. (NASDAQ:MU), Twitter Inc (NYSE:TWTR), GoPro Inc (NASDAQ:GPRO), CSX Corporation (NASDAQ:CSX), and EMCORE Corporation (NASDAQ:EMKR). Let’s examine why investors are buying these stocks at enhanced prices and see what the hedge funds in our database think of each of them.
At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).
Cowen & Co Pounds the Table on Micron
Micron Technology, Inc. (NASDAQ:MU) is 5% higher today due to bullish commentary from Cowen & Co.’s Tim Arcuri, who argued that Micron is in prime position to benefit from the rise of ‘hyperscale’ computing and cloud computing. Mr. Arcuri had this to say in regards to his bullish thesis:
“New big data and scale-out computing use cases are requiring workloads to “live” in a server with less reliance on traditional external storage arrays. In part due to its partnership w/INTC, MU remains uniquely positioned as a solutions provider because it is the only company producing all flavors of solid state memory – DRAM, NAND and storage class 3D XPoint. We continue to feel that investors under-appreciate MU’s opportunity around 3DXP, which we feel could add ~ $0.30 to C2018 EPS and grow materially from there.”
Arcuri has an ‘Outperform’ rating and a $13 price target on the stock, which suggests 21% upside. 64 elite funds that we track likely also have an ‘Outperform’ opinion on Micron Technology, Inc. (NASDAQ:MU), as they were all long stock at the end of December.
Value Investors Snap up Shares of a Social Media Giant
Twitter Inc (NYSE:TWTR) shares are 3.8% higher today as value investors snap up the stock. Given the advances in natural language processing and the number of e-commerce transactions that can be made through the chatbot conversation interface, some investors are snapping up Twitter in hopes that the company’s management can monetize its audience with chatbots in the future. Twitter has hundreds of millions of monthly users but has struggled to turn a profit from its audience.
Hedge fund sentiment in the stock turned more bullish in the fourth quarter after sinking throughout much of 2015. A total of 30 funds reported stakes in the company worth $320.88 million (representing 2.00% of the float) as of the end of December, up from 27 funds with $248.32 million in Twitter shares at the end of September. Dmitry Balyasny‘s Balyasny Asset Management owned 1.43 million shares of Twitter Inc (NYSE:TWTR) the end of 2015.
On the next page, we dig into the big moves being made today by GoPro Inc, CSX Corporation, and EMCORE Corporation.