Several companies whose stocks are very popular among hedge
funds reported quarterly earnings after the closing bell rang
on Wednesday. And most of them exceeded expectations,
potentially setting up a strong day Thursday for these and
perhaps other similar stocks.
Of course there was keen interest in Facebook, the embattled
social media pioneer and the most widely held stock among hedge
funds. The company’s first quarter earnings easily
exceeded expectations. In addition, the company announced
another $9 billion stock buyback. As a result, the stock shot
up about 7 percent in after-hours trading. However, the reality
is this is the last quarter Facebook will report results before
regulators and other critics began taking a very close look at
its data collection and dissemination strategy.
"It is not the same investment it was two years ago or three
years ago," said Ross Gerber, co-founder of investment
management firm Gerber Kawasaki, in an interview on CNBC. At
year-end, at least 265 hedge funds held a position in the
stock, according to Novus. At least 70 hedge funds counted the
stock among their top-10 holdings, according to Goldman
Shares of global payments giant Visa jumped nearly 3 percent
in after-hours trading after it reported second-quarter
revenues and earnings that beat consensus forecasts. The stock
was the seventh-most widely held among hedge funds at year-end,
with at least 209 holders, according to Novus.
Shares of electronic payments giant PayPal jumped more than
3 percent in after-hours trading after the company beat
quarterly earnings estimates. At year-end it had at least 141
hedge fund investors.
Meanwhile, shares of activist favorite Chipotle Mexican
Grill surged more than 10 percent after reporting earnings and
same-store sales figures that exceeded expectations. The casual
dining company also announced a $100 million stock buyback.
Bill Ackman’s Pershing Square Capital Management
is by far the largest shareholder.
UBS trimmed its price target on Caterpillar from $190 to
$178 after the heavy equipment manufacturer reported very
strong first-quarter results on Tuesday but warned that its
earnings are at a "high water mark" for the year. The
investment bank retained its Buy rating on the stock.
"We think this was misinterpreted by the market as a bearish
message implying the cycle is at peak," UBS asserts in a note
sent to clients Wednesday morning, stressing the message was
that the first quarter will just be the strongest quarter for
earnings this year. "We think CAT will approach mid-cycle
earnings over the next year," it adds. The stock is a
high-profile short bet of David Einhorn’s