Why Outerwall, Twitter, and 3 Other Stocks Are Turning Heads Today

It’s a red day on Wall Street, as all three indexes are moderately lower in morning trading. The Dow Jones is off by almost 100 points, the S&P 500 is 0.44% in the red, and the Nasdaq is off by 0.19% as traders worry about falling crude prices and weak global macro-economic conditions.

In this article, we’ll take a look at five stocks in the spotlight this morning and dig into SEC filings to determine what the smart money thinks of each stock. Those stocks are Bank of Hawaii Corporation (NYSE:BOH), Eagle Materials, Inc. (NYSE:EXP), Outerwall Inc (NASDAQ:OUTR), E*TRADE Financial Corp (NASDAQ:ETFC), and Twitter Inc (NYSE:TWTR).

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).

Bank of Hawaii Reports Earnings

Bank of Hawaii Corporation (NYSE:BOH) shares are 1.3% in the green after the bank reported earnings of $1.03 per share on sales of $150.07 million for the second quarter, beating the average analyst estimates by $0.10 per share and $0.94 million respectively. Sales rose by 4.4% year-over-year as loan and lease balance jumped by 12.2%. Book value per common share was $26.96, up from $24.88 a year earlier. Look for shares of the company to do well if interest rates rise. Cliff Asness‘ AQR Capital Management reported owning a stake of over 126,000 shares of Bank of Hawaii Corporation (NYSE:BOH) as of the end of March.

Eagle Materials Releases Results

Eagle Materials, Inc. (NYSE:EXP) turned in a strong first quarter of fiscal year 2017, reporting earnings of $0.93 per share on record sales of $297.5 million. Shares of the company are 1.7% higher as the results exceeded the consensus estimates by $0.07 per share and $2.01 million respectively. Cash flow from operations rose by 162% year-over-year and EBIT jumped by 18% to $17.2 million as demand for cement, concrete and aggregates was strong. The company also bought back 525,000 shares of common stock in the quarter. 30 hedge funds in our system were long Eagle Materials, Inc. (NYSE:EXP) as of March 31.

On the next page we’ll check out why Outerwall Inc, E*TRADE Financial Corp, and Twitter Inc are trending this morning.

Outerwall Sells Itself

Outerwall Inc (NASDAQ:OUTR) shares have surged by 11.4% in morning trading after affiliates of private equity firm Apollo Global Management agreed to buy the company for $52 in cash per share. The transaction has been unanimously approved by Outerwall’s Board of Directors and has an enterprise value of $1.6 billion when including debt. The deal is expected to close in the third quarter of 2016. Of the 766 funds that we track, 22 of them were long Outerwall Inc (NASDAQ:OUTR) on March 31, owning $272.28 million in shares, which accounted for a hefty 44.30% of the float.

E*TRADE Does M&A

E*TRADE Financial Corp (NASDAQ:ETFC) is in the spotlight after the brokerage house announced that it will buy the broker OptionsHouse for $725 million in cash. The transaction will strengthen E*TRADE’s derivatives market share as OptionsHouse has 154,000 customer accounts that have executed an average of 27,000 revenue trades per day over the last 12 months, with 63% of those being options trades. Management expects the transaction to be relatively neutral to earnings in 2017 and to be accretive in 2018 with full run-rate synergies of around $65 million a year at its peak. Traders aren’t as enthusiastic as E*Trade’s management, as shares of the company are off by more than 2% today. 39 funds in our system owned shares of E*TRADE Financial Corp (NASDAQ:ETFC) at the end of the first quarter, down by nine funds from the end of the previous quarter.

Twitter Adds More Live Streaming Content

Twitter Inc (NYSE:TWTR) is slowly but surely building out its streaming content library. A few weeks after announcing a deal to stream two NBA shows, the company announced that it will also live stream weekly out-of-market games from the NHL and MLB. The once-per-week live streams of out-of-market games will be free for Twitter users in the United States and should help Twitter boost its video sales at a time when monetization is still a struggle for the company. During the first quarter, the number of funds that we track with holdings in Twitter Inc (NYSE:TWTR) fell by three to 27.

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