It’s the first trading day of February and the stock market is in the red after the worst January since 2009. However, there are stocks that are trending in the opposite direction. Among the gainers today are Alere Inc (NYSE:ALR), Facebook Inc (NASDAQ:FB), Twitter Inc (NYSE:TWTR), Netflix, Inc. (NASDAQ:NFLX), and SYSCO Corporation (NYSE:SYY), as investors push up the price of each stock for various reasons. We’ll find out why in this article and also study the sentiment of an elite group of hedge funds towards these stocks.
Imitating hedge funds and other institutional investors can help identify some of the most profitable stocks on the market. However, our extensive research that covered the period between 1999 and 2012, showed that the best approach is to follow these investors into their small-cap stocks. Our backtests showed that the 15 most popular small-cap stocks among hedge funds managed to generate a monthly alpha of 81 basis points, versus an alpha of 0.7 percentage points posted by their top 50 large-cap picks (see more details here).
The first on the list is Alere Inc (NYSE:ALR), whose shares are nearly 45% higher after the announcement of a strategic acquisition in which Abbott Laboratories (NYSE:ABT) agreed to buy the medical test maker for $56 per share, or $5.8 billion. The combined business will increase the drugmaker’s EPS, adding $0.12-to-$0.13 next year and $0.20 in 2018. Moreover, it is expected that pre-tax synergies could reach $500M by 2019. Alere’s debt of $2.6 billion will be assumed by Abbott or refinanced.
Among the funds we follow, 39 reported long positions in Alere Inc (NYSE:ALR) as of the end of September, up by three funds from a quarter earlier, and they amassed 32.5% of the float. Among them, Matt Sirovich and Jeremy Mindich‘s Scopia Capital was the largest shareholder among those, reporting ownership of 4.86 million shares in its latest 13F filing.
Moving on, Facebook Inc (NASDAQ:FB) shares are up by 2% today with no notable news concerning the company. Days ago, the company reported its greatest quarter since mid-2013 and its shares today reached an all-time high. The company reported fourth-quarter earnings of $0.79 per share on revenue of $5.84 billion last week.
Facebook Inc (NASDAQ:FB) lost a little popularity in the third quarter of 2015, as out of the 730 funds that we track, 128 funds held shares of the company on September 30, down from 133 funds on June 30. Stephen Mandel’s Lone Pine Capital was the largest shareholder of Facebook in our system, with 10.7 million shares valued at almost $1.0 billion at the end of September.