Why Are These 4 Stocks Among the Top Gainers Today?

Despite some choppy trading in the first hour after the bell, U.S stocks have turned positive and are pushing higher this morning, helped by a wave of positive quarterly reports. Eros International plc (NYSE:EROS), Nuance Communications Inc. (NASDAQ:NUAN), TJX Companies Inc (NYSE:TJX) and Vipshop Holdings Ltd – ADR (NYSE:VIPS) have stood out among the top gainers so far today, so let’s find out why investors are driving these stocks higher.

crystal51/Shutterstock.com

Let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith (and money) in large-cap stocks. In forward tests since August 2012 these top small-cap stocks beat the market by an impressive 53 percentage points, returning 102% (read the details here). Follow the smart money into only their best investment ideas all while avoiding their high fees.

Shares of Eros International plc (NYSE:EROS) have jumped by 11.75% this morning following the announcement of its fiscal year 2016 second quarter financial results. A big player in the Indian entertainment industry, Eros registered a 98% surge in revenue year-over-year, reporting $98.8 million in revenue and a profit of $0.12 per share, while analysts were looking for earnings of $0.39 per share on the back of $90.7 million in revenue. Although the company reported negative cash flow, its management is confident that it will become cash flow positive by the end of the fiscal year, as it is planning to up its efforts in claiming overdue receivables.

While Eros International plc (NYSE:EROS) is not among the favorite stocks of investors, 14 hedge funds that we track were invested in it at the end of the second quarter, holding roughly 5% of the company’s common stock. Hedge fund guru Jim Simons is very bullish on this stock, with his quant fund Renaissance Technologies having reported in its latest 13F filing a 315% boost to its stake in Eros, to 730,252 shares. Chase Coleman is also optimistic about the prospects of the company, having recently increased his investment to 1.2 million shares valued at $32.6 million.

It’s all smiles this morning for shareholders of Nuance Communications Inc. (NASDAQ:NUAN), as the stock is soaring by over 15% following a better-than-expected financial report. The company posted its 2015 fiscal fourth quarter results after the closing bell yesterday, and managed to beat Wall Street’s earnings expectations, though it missed revenue estimates. Nuance registered earnings of $0.41 per share versus expectations of $0.35 per share, while revenue came in at $504 million, below analysts’ projections of $507 million.

At the end of June, hedge fund’s holdings of Nuance Communications Inc. (NASDAQ:NUAN) were valued at $1.21 billion, with 25 top funds that we track holding approximately 22% of its outstanding stock. Legendary activist investor Carl Icahn is betting big on Nuance, with it among his top ten picks for the third quarter. In its latest 13F filing, Icahn Capital LP reported maintaining its holding of 60.7 million shares, the largest holding in the stock among the funds that we follow.

A solid third quarter report has pushed TJX Companies Inc (NYSE:TJX) up as well this morning, with shares opening 6.4% higher before erasing some of those gains. An operator of off-price apparel and home fashion retail outlets, TJX Companies registered $7.75 billion in sales, up by 5.3% year-over-year, above analysts’ estimates of $7.68 billion, while earnings of $0.86 per share beat market expectations of $0.84 per share as well. The company also said that it now expects full year profit to range between $3.26 and $3.28 per share.

Although there were 33 hedge funds that reported holding a long position in TJX Companies Inc (NYSE:TJX) as of the end of the second quarter, their combined holdings amounted to just 3% of the stock’s outstanding shares. Among the funds that we follow, the largest investment in the company is held by Diamond Hill Capital, run by Ric Dillon. In its latest 13F filing, the fund reported ownership of 3.98 million shares valued at $284 million. Peter Rathjens, Bruce Clarke and John Campbell stepped up their interest in TJX Companies during the third quarter, doubling their stake to 3.86 million shares.

Having crushed the stock on Friday after its preliminary third quarter results were released, investors are pushing Vipshop Holdings Ltd – ADR (NYSE:VIPS) higher today ahead of the actual earnings report, due after the closing bell today. The company was forced to revise its estimates, as its sales were hit by a warm autumn that led to customers delaying their shopping for winter apparel. Vipshop said it expects revenues to range between 8.6 billion yuan and 8.7 billion yuan ($1.35 billion and $1.36 billion), while analysts are looking for earnings of roughly $0.18 per share.

Vipshop Holdings Ltd – ADR (NYSE:VIPS) is another stock Chase Coleman is bullish on, having boosted his stake by 15% to 17.4 million shares worth in excess of $292 million. John Burbank, on the other hand, chose caution and reduced his exposure to the stock. According to Passport Capital’s latest 13F filing, its investment amounts to 9.26 million shares valued at $155 million. Vipshop Holdings gained some popularity among the funds that we follow in the second quarter, with 54 of them invested at the end of the period, up from 48 at the beginning of it.

Disclosure: None