How Is The Market Reacting To These Earnings Results Today?

The work week is just getting underway but the financial markets are already humming thanks to the earnings results of several major companies this morning. The early sentiment from investors appears to be disappointment at the results of many of these companies, as their shares have dipped in morning trading. Let’s check out the results of DISH Network Corp (NASDAQ:DISH), Sothebys (NYSE:BID), Hertz Global Holdings Inc (NYSE:HTZ), and Priceline Group Inc (NASDAQ:PCLN), and see what they could mean for those companies’ stocks.

Tupungato / Shutterstock.com

We’ll start with DISH Network Corp (NASDAQ:DISH), which has slipped by 1.19% this morning following the release of its third quarter earnings before the bell. While Dish Network’s earnings enjoyed strong year-over-year gains of 35.5% to $0.42 per share, revenue was up by just 1.4% from a year ago and missed estimates of $3.79 billion by $60 million. The number of pay-TV subscribers under contract with DISH Network Corp (NASDAQ:DISH) fell by about 100,000 from the third quarter of 2014 to 13.91 million, though the revenue per subscriber increased by nearly $2.00 to $86.33. The top media stock pick of Mario Gabelli, Dish Network was in the portfolios of 68 investors that we track at Insider Monkey as of June 30, who held an even 24% of the firm’s shares.

Whether elite hedge funds collectively like a stock or not is an important metric to consider, as these large investors show a great level of skill and expertise when it comes to picking stocks. Over the last few years equity hedge funds have trailed the market by a large margin, but that’s mostly due to their hedging and short positions, which perform poorly in a bull market. Their long positions performed far better, especially their small-cap picks, which have the potential to beat the market by 95 basis points per month on average, as our backtests showed. Our small-cap strategy involves imitating a portfolio of the 15 most popular small-cap picks among hedge funds and it has returned 102% since August 2012, beating the S&P 500 ETF (SPY) by over 53 percentage points (read more details here).

Auction service Sothebys (NYSE:BID) enjoyed a stronger third quarter across the board, seeing revenue rise by 46% to $138 million year-over-year, while earnings improved by 35% to a loss of $0.26 per diluted share. Both results beat analysts’ estimates, with revenue toppling estimates by $27 million, while earnings beat by $0.01. Sothebys (NYSE:BID) President and Chief Executive Officer Tad Smith cited the firm’s strong results in the Impressionist, Modern and Contemporary Art categories, which he said are on pace for records this year. The results have shot shares strongly out of the morning starting gates, as they’re up by 4.76%. Hedge funds in our database were quite bullish on Sotheby’s, owning 41.50% of its shares on June 30. 27 investors held long positions in the stock worth $1.30 billion, led by billionaire Dan Loeb‘s Third Point with 6.65 million shares.

We have two more earnings reports to dig into, which we’ll do on the next page.

Hertz Global Holdings Inc (NYSE:HTZ) is down by 5.64% in morning trading after reporting a year-over-year revenue decline of 5% to $2.98 billion, which missed estimates by $50 million. Revenue was hit hard for foreign exchange headwinds, which contributed to a 13.6% revenue decline in its international auto rental business. Car rental revenue did also fall in the U.S however, by 1.9%. Earnings were in-line at $0.52 per share, up by $0.20 year-over-year, though by just $0.05 when excluding non-recurring gains. Activist Carl Icahn is a long-term shareholder of Hertz Global Holdings Inc (NYSE:HTZ), which hurt him during the third quarter as shares fell by 7.67%. Barry Rosenstein, who got stung by QUALCOMM, Inc. (NASDAQ:QCOM)’s results last week also held a large position in Hertz, potentially setting him up for a very disappointing quarter.

Like Qualcomm last week, Priceline Group Inc (NASDAQ:PCLN) issued weak guidance for its current financial quarter, which has its shares down by 5.68% today. EPS was projected to be $11.10-to-$11.90 for the fourth quarter, while analysts were predicting $12.38 according to Bloomberg data. The weak guidance has put a damper on what was a solid third quarter, with revenue of $3.10 billion and earnings per share of $25.35. Analysts had predicted EPS of $24.23 for the completed quarter. Priceline Group Inc (NASDAQ:PCLN) was losing some of the support it had from the investors that we track, as the number of them which held long positions in the stock fell to 71 from 82 during the second quarter. Jim Simons, Louis Bacon, and Paul Tudor Jones were among the investors to close out long positions in Priceline during the quarter.

Disclosure: None