Buzzing Stocks: CBS, Zillow Group, Generac, More

The markets remain shaky as morning turns to afternoon on this hump day amid mixed reports about the U.S and global economic situation. The services sector grew in April, as new orders and employment increased according to the Institute of Supply Management’s report. On the other hand, a report from Automatic Data Processing Inc. presented a bleak picture of private sector growth. Meanwhile, companies continue to announce their quarterly financial results, which proving to be a catalyst for many stocks today. Among the companies whose stocks are moving today after the release of their latest earnings reports are CBS Corporation (NYSE:CBS), Zillow Group, Inc.- Class C (NASDAQ:ZG), Generac Holdings Inc. (NYSE:GNRC), Illumina, Inc. (NASDAQ:ILMN), and Anheuser Busch Inbev SA (ADR) (NYSE:BUD). Let’s check out how these companies performed in their latest financial quarters and see what the hedge funds in our database think about them. 

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).

CBS Beats Estimates

CBS Corporation (NYSE:CBS)’s stock has gained 0.43% today after the company reported an increase in quarterly revenue and profit. The mass media company posted net income of $473 million, or $1.02 per share, up from $394 million, or $0.78 per share a year earlier. First quarter revenue surged by 10% to $3.85 billion, beating estimates of $3.83 billion, thanks to strong ad revenue from the Super Bowl, and affiliate and subscription fees. Ad revenue for the CBS network increased by 49%, mainly due to NFL broadcasts. In a statement, the Chairman and CEO of CBS, Leslie Moonves, said that the company is in an “enviable” position for the current year because of its strengths, which include its primetime lineup and robust ads business. Mr. Moonves added that ads revenue is poised for more growth following an increase in political ad spending.

As of the end of the fourth quarter of last year, 64 funds out of those tracked by us held approximately $3.3 billion worth of positions in CBS Corporation (NYSE:CBS). As of March 31, Murray Stahl’s Horizon Asset Management had 298,241 shares of the company.

Zillow Group Posts 25% Increase in Revenue

Zillow Group, Inc.- Class C (NASDAQ:ZG)’s shares have skyrocketed by more than 13% after the company reported better-than-expected quarterly results. Revenue surged by 25% year-over-year to $186 million, beating analysts’ expectations of $176.66 million. Real estate revenue was particularly strong, increasing by 34% on a year-over-year basis to $152.5 million. However, the company’s non-GAAP loss per share was $0.13, missing the estimated loss of $0.09 per share. For the full year, the company now expects revenue in the range of $825 million to $835 million. Zillow Group, Inc. – Class C (NASDAQ:ZG)’s CEO, Spencer Rascoff, said in a statement that the company is off to an incredible start this year and that it has strong prospects for future growth. Zillow Group experienced a record number of unique users in March.

Out of the 785 active funds tracked by Insider Monkey, 22 funds held long positions in Zillow Group, Inc.- Class C (NASDAQ:Z) at the end of the fourth quarter of 2015. Daniel Gold’s QVT Financial held 350,000 shares of the company at the end of December.

On the next page we will discuss the results of Generac Holdings, Illumina, and Anheuser Busch Inbev.

Generac Holdings Suffers a Poor Quarter

Less power outages and declining oil prices dented the first quarter results of Generac Holdings Inc. (NYSE:GNRC), but the power products company still managed to surpass the Street’s estimates. Generac Holdings’ revenue dropped by 9% to $286.5 million, beating analysts’ expectations of $280.74 million. EPS came in at $0.46, also beating estimates, by $0.04. The company’s CEO, Aaron Jagdfeld, said in a statement that sales of mobile products were affected by low oil and gas prices. However, the company is hopeful for the future. It expects a 10%-to-12% rise in sales in 2016 due to its recent acquisition of Italy-based power generation company, Pramac. Shares of Generac Holdings Inc. (NYSE:GNRC) are more than 2% in the red today.

As of December, 31, just eight hedge funds in our system had positions in Generac Holdings Inc. (NYSE:GNRC), with a total value of approximately $73 million. Gilchrist Berg’s Water Street Capital was one of the biggest stakeholders, owning more than 1.6 million shares of the company.

Illumina, Inc. (NASDAQ:ILMN) Misses Estimates

Illumina, Inc. (NASDAQ:ILMN) is up by 0.31% today despite the company posting a 34% year-over-year dip in revenue amid rising expenses. The company reported EPS of $0.60 on revenue of $572 million for the first quarter, missing analysts’ consensus expectations of $0.74 in EPS on $593 million in revenue. Expenses in the quarter jumped to $124 million from $91.8 million in the first quarter of last year. For the full year, the genome sequencing company now expects EPS in the range of $3.35 to $3.45, down from a previous estimated range of $3.55 to $3.65. Illumina’s CEO, Jay Flatley, said that the company remains positive about the growth potential of gene-sequencing. He said that the company’s projects with the biggest potential are still in the early stages of development, and are likely to bear fruit in the near future.

At the end of 2015, 40 hedge funds in our database held $1.3 billion worth of Illumina, Inc. (NASDAQ:ILMN) shares. That was down greatly from 62 hedge funds with long positions a quarter earlier.

Revenue and Sales Decline for Anheuser Busch Inbev

Anheuser Busch Inbev SA (ADR) (NYSE:BUD) has lost more than 2% today after its revenue and sales in the first quarter missed analysts’ estimates. The Belgium-based brewing company’s revenue was $9.4 billion for the quarter, down from $10.45 billion in the same quarter of last year, and widely missing analyst expectations of $10.04 billion. Profit fell even more heavily, to $844 million from $2.3 billion a year earlier, mainly because of unfavorable exchange rates in Latin America, with the company saying in a statement that its Brazil business faced the most difficulties in the quarter. Anheuser Busch Inbev SA (ADR) (NYSE:BUD) is hopeful that its $108 billion takeover of SABMiller will boost its revenue in the future.

Ken Fisher’s Fisher Asset Management is one of the biggest shareholders of Anheuser Busch Inbev, with total ownership of more than 5.00 million shares as of March 31.

Disclosure: None