With markets expected to extend their rally into the current week a number of stocks are already shaping their trajectory for the upcoming days. However, often the news has a short-term impact on a stock and smaller investors tend to overlook this while buying or selling shares. On the other hand, smart money investors usually focus on the long-term prospects of a company and following their sentiment can help to see where the stock is most likely to head, thus it helps to avoid buying a growing stock that is already overvalued or selling shares of a depreciating stock on fear that it will fall further, while it has a high chance of rebounding.
At Insider Monkey we do just that. By following the 13F filings of over 700 elite hedge funds, we are analyzing their sentiment towards several thousand publicly-traded companies and see where these investors like to put their money. However, we mostly focus on their small-cap ideas, because they are the focus of our strategy, as we determined that 15 most popular stock picks among them can beat the market by double digits every year. Since our strategy went live in August 2012, these 15 most popular small-cap picks returned 102%, beating the S&P 500 ETF (SPY) by around 53 percentage points (see more details here).
With this in mind, let’s take a look at three stocks that are in the spotlight on Monday morning. We will start with Twitter Inc (NYSE:TWTR), whose stock slumped by over 4% after re/code reported that the company is planning layoffs across almost all departments. Even though a Twitter spokesperson told re/code that they are not commenting on speculations, multiple sources from inside the company said that the layoffs will be announced next week and will impact especially engineers, which currently represent about half of the 4,100 employees the company has. The company has recently appointed Jack Dorsey, a cofounder of the company, as the new CEO and apparently he is not wasting time on the job. Earlier this year, Twitter Inc (NYSE:TWTR)’s stock slumped as the company reported weak financial results, so the restructuring might help it boost its efficiency and will please the investors who have lost their confidence in the stock. Among the hedge funds that we track, Twitter has been downgraded as the number of investors with long positions in the company slipped to 47 from 64 between April and June, while the aggregate value of their holdings slid to $701.39 million from $1.75 billion and represented only 2.90% of the company at the end of the second quarter. Among these funds, the top shareholder of Twitter Inc (NYSE:TWTR) is Daniel Benton‘s Andor Capital Management, which slashed its stake by 63% to 1.50 million shares.