Although the three major indexes are in the red this morning due to several negative tech earnings reports released after the market close yesterday, the shares of Whiting Petroleum Corp (NYSE:WLL), Seadrill Ltd (NYSE:SDRL), Legacy Reserves LP (NASDAQ:LGCY), Barracuda Networks Inc (NYSE:CUDA), and STMicroelectronics NV (ADR) (NYSE:STM) are not feeling any ill effects from the broader market dip, with each enjoying strong gains today. Let’s find out why traders are bidding these five stocks up and see how the smart money is positioned in 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).
Crude Oil Optimism Sends Shares of Whiting, Seadrill, and Legacy Reserves Higher
Whiting Petroleum Corp (NYSE:WLL), Seadrill Ltd (NYSE:SDRL), and Legacy Reserves LP (NASDAQ:LGCY) are 6.6%, 6.4%, and 20.6% higher on the back of renewed crude oil optimism. Crude prices have surged since mid-February as U.S oil production has declined and various OPEC countries have run into supply transportation difficulties. Helping sentiment was yesterday’s bullish API report, which showed inventory falling rather than rising. Unfortunately, today’s more accurate EIA report showed crude inventories rising by 2 million barrels, gasoline inventories increasing by 1.6 million barrels, and distillates falling by 1.7 million barrels last week. Although those numbers, with the exception of gasoline, were better than expected, they weren’t as bullish as the API report. The short and intermediate-term for crude oil still looks promising however, and that’s good for oil and gas E&Ps and energy service companies.
Whiting Petroleum Corp (NYSE:WLL) was held by 40 elite funds that we track, out of a total of 786 as of the end of December. Those 40 funds owned more than 22% of Whiting’s float. Whiting is expected to release its latest quarterly earnings results later today.
The number of shareholders in our database that own Seadrill Ltd (NYSE:SDRL) fell by two quarter-over-quarter to 21 by the end of the fourth quarter, while the number of funds holding Legacy Reserves LP (NASDAQ:LGCY) in their portfolios inched lower by one during the fourth quarter, to three at the end of December.
On the next page we examine why Barracuda Networks, and STMicroelectronics NV (ADR) are hot today.
Barracuda Shares Soar on Earnings Results
Barracuda Networks Inc (NYSE:CUDA), a leading provider of cloud-connected security and data protection solutions, has surged by 15% after the tech company reported fourth quarter of fiscal year 2016 earnings of $0.15 per share on sales of $83.73 million, beating the consensus estimates by $0.06 per share and $2.84 million, respectively. Gross billings for the quarter were $95.8 million, up from $96.1 million for the fourth quarter of fiscal year 2015. Active subscribers in the quarter grew by 14% year-over-year to 278,000, while the company’s dollar-based renewal rate was 96%. For the full 2016 fiscal year, Barracuda reported revenue of $320.2 million, up by 15% year-over-year, gross billings of $377.5 million, up by 4% year-over-year, and a GAAP net loss of $4.4 million. Non-GAAP net income was $22.7 million, or $0.42 per share.
Of the 786 elite funds that we track, 15 of them owned $44.18 million worth of Barracuda Networks Inc (NYSE:CUDA)’s shares on December 31, which accounted for 4.40% of the float. The value of their holdings was nearly double the $22.29 million worth of shares found in 14 funds’ portfolios on September 30.
STMicroelectronics Rises Despite Missing Consensus Estimates
Traders are in a forgiving mood this morning, having bid shares of STMicroelectronics NV (ADR) (NYSE:STM) up to the tune of 10.6% despite the fact that the company missed analysts’ estimates with its first quarter results. For the first three months of the year, STMicroelectronics lost $0.02 per share on sales of $1.61 billion, a slight miss of estimates of flat income and $1.62 billion in revenue. Although STMicroelectronics NV (ADR) (NYSE:STM) sales dropped by 5.3% year-over-year, management is committed to bringing the company back to year-over-year growth this year, with a special focus on smart driving and the internet of things. Management expects second quarter revenue to rise by 5.5% on a sequential basis, plus or minus 3.5 percentage points. Gross margin for the period is expected to come in between 32% and 36%. Jim Simons‘ Renaissance Technologies was a top shareholder of the company at the end of December.