Five Stocks Traders Are Watching Today: Brocade Communications, Valeant, BlackBerry, and More

With crude futures up and the latest batch of earnings reports improving sentiment, all three indexes have opened moderately in the green. Among the stocks that traders are watching today are several major companies, Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Brocade Communications Systems, Inc. (NASDAQ:BRCD), Broadcom Ltd (NASDAQ:AVGO), BlackBerry Ltd (NASDAQ:BBRY), and Ford Motor Company (NYSE:F).

Let’s examine the associated catalysts causing each stock to trend and analyze hedge fund sentiment toward the stocks.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 745 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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Valeant Pharmaceuticals Intl Inc (NYSE:VRX) shares are up by 5% this morning after falling 12% yesterday on the back of the news that the company’s former CFO, Howard Schiller, and CEO, Michael Pearson, are involved in a criminal probe. Specifically, federal prosecutors are looking into potential accounting fraud in relation to Valeant’s ties with the infamous specialty pharmacy, Philidor. No charges have currently been levied however, and the case continues to evolve quickly. Valeant meanwhile, has responded by saying the following:

“As Valeant previously stated in response to a prior, similar press report, the Company previously disclosed in October 2015 that the United States Attorney’s Office for the Southern District of New York commenced an investigation involving Valeant. We have been fully cooperating with the authorities throughout the investigation, and we are in frequent contact and continue to cooperate with the U.S. Attorney’s Office for the Southern District of New York.”

Bill Ackman’s Pershing Square owned more than 21 million shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) at the end of the second quarter.

Traders are keeping a close eye on Brocade Communications Systems, Inc. (NASDAQ:BRCD) after the stock surged sharply yesterday on a Bloomberg report saying the company was close to the final stages of potentially selling itself. Among some of the interested parties according to Bloomberg’s sources is a serial acquirer of late, Broadcom Ltd (NASDAQ:AVGO). Although there is no guarantee a deal will be reached, the sale of Brocade could occur as early as this week. Of the two companies, the smart money liked Broadcom Ltd (NASDAQ:AVGO) more, with 74 funds from our database reporting stakes as of the end of June. Meanwhile, 28 investors were long Brocade Communications Systems, Inc. (NASDAQ:BRCD) in the same time period.

On the next page, we examine why investors are buzzing about BlackBerry and Ford Motor Company.

BlackBerry Ltd (NASDAQ:BBRY) is in the spotlight today after the tech company struck a deal with Ford Motor Company (NYSE:F) to provide software for Ford’s connected vehicles. Specifically, BlackBerry will expand the use of its QNX software in Ford cars and will assign a dedicated team to help Ford expand the use of the software.

“The future of the automobile is all about embedded intelligence. I believe our expertise in secure embedded software makes us the preferred technology provider to put the smart in the car,” BlackBerry CEO John Chen said.

Bulls hope BlackBerry’s deal with Ford will open the door for similar deals with other car giants, and thereby help BlackBerry grow faster. The deal is seen by some investors as another example of BlackBerry focusing more on the the potentially lucrative connected vehicle software market. The deal for Ford shows that the automaker is committed to successfully transitioning to the connected car future. According to our records, 20 funds we track were long BlackBerry Ltd (NASDAQ:BBRY) and 31 investors held shares of Ford Motor Company (NYSE:F) at the end of June.

Disclosure: None