Why Are These Five Stocks in Spotlight Today?

Crude futures have slid below $41 per barrel as sentiment around the commodity remains negative. Meanwhile, the US stock market is mixed amid the ongoing earnings season and after the US Commerce Department said the US economy grew by 1.2% in the second quarter, below expectations.

In this article, we take a look at why traders are talking about Digital Realty Trust, Inc. (NYSE:DLR), Spirit Airlines Incorporated (NASDAQ:SAVE), Anheuser Busch Inbev SA (ADR) (NYSE:BUD), TerraForm Power Inc (NASDAQ:TERP), and Alon USA Energy, Inc. (NYSE:ALJ) this morning. We will also examine data from 13F filings to see what the smart money thinks about each stock.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 770 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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Digital Realty FFO Ahead of Estimates

Digital Realty Trust, Inc. (NYSE:DLR) reported FFO of $1.42 per share on revenue of $514.94 million for its second quarter, beating the consensus by $0.04 per share and $6.32 million, respectively. Core FFO grew by 9.2% year-over-year, while adjusted EBITDA jumped by 20% to $296.9 million. In addition, Digital Realty’s management raised full-year core FFO guidance to $5.65 to $5.75 per share, from the previous $5.55-to-$5.65 range. Among the investors we track, Jim Simons’ Renaissance Technologies bumped up its stake in Digital Realty Trust, Inc. (NYSE:DLR) by 21% to 932,000 shares during the January-March period.

Spirit Reports Results

Spirit Airlines Incorporated (NASDAQ:SAVE) delivered mixed results for the second quarter, beating profit estimates by $0.03 per share, with a figure of $1.11, but sales of $583.13 million missed revenue expectations by $2.95 million. Total revenue per passenger flight segment dropped by 15% year-over-year to $104.19, while adjusted cost per available seat mile (CASM) fell by 15.1% year-over-year to $0.0707. Adjusted CASM ex-fuel declined by 8.6% to $0.053. Load factor was 86.4%, up from 86% in the second quarter of 2015. A total of 28 funds from our database owned shares of Spirit Airlines Incorporated (NASDAQ:SAVE) at the end of March, down by seven funds from the previous quarter.

On the next page, we find out why Anheuser Busch Inbev, TerraForm Power, and Alon USA Energy are trending.

Anheuser in the Spotlight

Anheuser Busch Inbev SA (ADR) (NYSE:BUD) posted EPS of $1.06 on sales of $10.81 billion for the second quarter, comfortably beating profit estimates by $0.06 per share but missing the top-line consensus estimate by $120 million. Although the total volume declined by 1.7% year-over-year, revenue rose by 4%, driven by robust growth in the company’s premium brands. EBITDA grew by 4.3% to 4.011 billion and the company also made significant progress towards getting regulator approval to merger with SABMiller. Management believes the merger will close sometime this year. The number of investors from our database with holdings in Anheuser Busch Inbev SA (ADR) (NYSE:BUD) fell by four quarter-over-quarter to 32 at the end of March.

Alon USA Posts Mixed Results

Traders are watching Alon USA Energy, Inc. (NYSE:ALJ) today after the company disclosed a second-quarter loss of $0.21 per share on sales of $1 billion, missing profit estimates by $0.02 per share and beating the top-line expectations by $143.34 million. Sales slid by 23.1% year-over-year amid pressure on crack spreads from high product inventories. The average Gulf Coast 3/2/1 crack spread was $13.16 per barrel in the quarter, versus $19.71 a year earlier. Bulls hope the spread will increase as product inventories decline. At the end of the first quarter, 15 funds owned shares of Alon USA Energy, Inc. (NYSE:ALJ), compared to 21 funds a quarter earlier.

TerraForm Said to Put Itself on the Selling Block 

According to a Bloomberg article, TerraForm Power Inc (NASDAQ:TERP) is in the process of setting up an auction beginning in September to sell itself. TerraForm Power’s interest in selling itself is likely due to Brookfield Asset Management having tried to buy control of the company earlier. TerraForm’s board subsequently instituted a ‘poison pill’ to prevent any outside action that would dramatically undervalue the company. Among the investors we track, 29 funds owned $353.96 million worth of TerraForm Power Inc (NASDAQ:TERP)’s stock, which accounted for 29.40% of the float on March 31, versus 24 funds and $608.8 million, respectively, at the end of December.

Disclosure: None