A Look at Five Stocks Trending on M&A News, Earnings

Crude futures are in the red again after the latest EIA report showed commercial crude oil inventories rising by 1.7 million barrels last week. Meanwhile, the Dow and NASDAQ are up while the S&P 500 is in the red, largely due to Apple Inc. (NASDAQ:AAPL)’s solid financial results.

In this article, we take a closer look at why five stocks, Analog Devices, Inc. (NASDAQ:ADI), Linear Technology Corporation (NASDAQ:LLTC), Garmin Ltd. (NASDAQ:GRMN), Equity Residential (NYSE:EQR), and Horizon Bancorp (NASDAQ:HBNC), are in the spotlight. In addition, we are going to assess the hedge fund sentiment towards each stock.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 770 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

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M&A Deal in Tech Sector

Traders are watching Analog Devices, Inc. (NASDAQ:ADI) and Linear Technology Corporation (NASDAQ:LLTC) after Bloomberg published an article yesterday stating that Analog would buy Linear technology for $14.8 billion. The bid translates to around $60 in cash and stock per share in a deal that should close by the first half of 2017 (The exact terms are $46 per in cash per share and 0.2321 of a share of Analog Devices common stock for each share of Linear Technology). Analysts at Oppenheimer are fans of the deal, having upgraded Analog Devices to ‘Outperform’ from ‘Market Perform’ and setting a $80 price target based on the potential for substantial accretive synergies between the two. Meanwhile, Linear is separately in the spotlight for reporting fiscal fourth quarter earnings of $0.54 per share on sales of $373.76 million, both of which were in-line with analyst estimates. A total of 22 funds tracked by our team were long Analog Devices, Inc. (NASDAQ:ADI), while 28 funds reported holding shares of Linear Technology Corporation (NASDAQ:LLTC) as of the end of March.

Garmin Rises on Earnings Beat

Garmin Ltd. (NASDAQ:GRMN) has soared by 11.2% today after the company delivered an excellent second quarter. For the time period, Garmin earned $0.87 per share on sales of $811.61 million, beating the consensus by $0.20 per share and $48.63 million, respectively. Sales appreciated by 4.9% year-over-year as each business segment delivered a strong performance. Guidance is better than expected as well. Management raised full-year EPS guidance to $2.50 from $2.25 and increased the revenue estimate to $2.9 billion from $2.82 billion. Among the funds we track, 21 funds owned $137.89 million worth of Garmin Ltd. (NASDAQ:GRMN)’s stock, which accounted for 1.70% of the float on March 31, versus 20 funds and $128.12 million, respectively, on December 31.

On the next page, we take a closer look at Equity Residential, and Horizon Bancorp.

Equity Residential Whiffs

Equity Residential (NYSE:EQR) is in the spotlight after the REIT reported FFO of $0.90 per share for the second quarter on revenue of $594.94 million. Although FFO for the time period was flat from one year ago, traders nevertheless sent the stock lower as the company warned that slowing growth of higher paying jobs in New York and San Francisco has created headwinds that will likely reduce revenue growth in the future. Management sees FFO per share of $2.96 to $3.02 for the full year, down from the previous range of $2.96 to $3.06. The number of investors from our database with holdings in Equity Residential (NYSE:EQR) rose by one quarter-over-quarter to 20 at the end of March.

Horizon Bancorp Reports Earnings

Horizon Bancorp (NASDAQ:HBNC) earned $0.57 per share on sales of $30.74 million in the second quarter, beating the average analyst estimates by $0.02 and $1.07 million, respectively. Total loans rose by 8.1% on an annualized basis, while core net interest margin came in at 3.42% versus 3.51% for the same period of 2015. Tangible book value rose to $17.17 per share from $17.06 a year earlier. Among the investors we track, Jim Simons’ Renaissance Technologies owned 140,150 shares of Horizon Bancorp (NASDAQ:HBNC) at the end of the first quarter.

Disclosure: none