Here’s Why These Five Stocks Are Trending on Wednesday

With the three major indexes down 1% or more, T-Mobile US Inc (NASDAQ:TMUS), Sirius XM Holdings Inc. (NASDAQ:SIRI), Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Sonic Corporation (NASDAQ:SONC), and Oracle Corporation (NYSE:ORCL) are each trending today following different developments that we are going to discuss in this article.

Given that Insider Monkey has done a lot of research into what the smart money likes and doesn’t like, let’s also analyze relevant hedge fund sentiment toward these stocks. But why do we track hedge fund activity? From one point of view we can argue that hedge funds are consistently underperforming when it comes to net returns over the last three years, when compared to the S&P 500. But that doesn’t mean that we should completely neglect their activity. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. In our back-tests covering the 1999-2012 period hedge funds’ top small-cap stocks edged the S&P 500 index by double digits annually. The 15 most popular small-cap stock picks among hedge funds also have bested passive index funds by around 53 percentage points since September 2012 (see the details here).

T-Mobile US Inc (NASDAQ:TMUS) continues to grow, as the renegade ‘uncarrier’ announced that it added 8.3 million net subscribers in 2015, marking the second straight year that T-Mobile US Inc (NASDAQ:TMUS) has added more than 8 million subscribers to its rolls. Many users are switching to T-Mobile because of the cell carrier’s affordable plans and the company’s ‘Binge On’ video streaming option. Despite the good news, T-Mobile shares are off by 1.3% along with the broader market as the stock takes some time to consolidate its excellent 2015 gains.

In other news, Sirius XM Holdings Inc. (NASDAQ:SIRI) is slightly in the red today after the company announced that it added 2.3 million subscribers in 2015, exceeding the 2 million that management previously predicted. Given the margin leverage associated with satellite radio, the more subscribers Sirius XM Holdings Inc. (NASDAQ:SIRI) gets, the more profitable it becomes. Of the around 730 elite funds we track, 35 funds owned $1.4 billion of Sirius XM Holdings Inc. (NASDAQ:SIRI)’s shares at the end of the third quarter, versus 32 funds and $1.47 billion respectively on June 30.

On the next page, we examine Valeant Pharmaceuticals Intl Inc, Sonic Corporation, and Oracle Corporation.

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is slightly in the green today after the embattled drug company announced Howard B. Schiller will be the interim CEO of the company while previous CEO Michael Pearson is hospitalized due to severe pneumonia. Schiller was Valeant’s CFO from December 2011 to June 2015. In addition, Robert Ingram, the lead independent director, will serve as the interim chairman of Valeant’s board.

“As Mike’s medical leave continues, and the timing of his recovery and return remains uncertain, Howard will now step in as CEO on an interim basis. Howard’s performance as Valeant’s CFO, as well as his deep understanding of Valeant’s operations, are excellent and we are grateful that he has agreed to take on this role. The Board will continue to work closely with Howard and the other members of the senior management team to implement Valeant’s strategy successfully in Mike’s absence,” Ingram was quoted as saying in a statement.

Sonic Corporation (NASDAQ:SONC)’s stock has declined by some 9% in morning trading despite reporting solid first quarter earnings of $0.24 per share on revenue of $145.8 million, beating estimates by $0.01 per share and $1.38 million. Sales rose 4.2% year-over-year, while the restaurant chain’s same-store sales jumped by 5.3%. Management expects same store sales to rise by another 2% – 4% in 2016 and for EPS to grow by 16% – 20%. Hedge funds are bullish on Sonic Corporation (NASDAQ:SONC), as 30 funds from our database reported long positions in the company as of the end of September, versus 24 funds a quarter earlier.

The analysts at Evercore are more bullish on Oracle Corporation (NYSE:ORCL), as they recently have upgraded the company to ‘Buy’ from ‘Hold’ on the belief that much of the downside risk to the stock has already been priced in. The analysts like Oracle Corporation (NYSE:ORCL)’s recurring revenue streams and believe the company’s 12.6 forward P/E makes the stock undervalued given the software giant’s cash flow visibility. A total of 57 funds among those we track held shares of Oracle at the end of September, amassing 4.70% of its outstanding stock.

Disclosure: none