With the stock market in the green on Friday on the back of a cut in interest rates in China and a boost in the tech sector on the back of earnings (the NASDAQ is up by almost 2%), several companies are standing above the crowd in beating the broader market. Namely Gigamon Inc (NYSE:GIMO), Celyad SA (ADR) (NASDAQ:CYAD), Quality Systems, Inc. (NASDAQ:QSII), and athenahealth, Inc (NASDAQ:ATHN) have registered significant jumps on the back of varied news. Let’s take a closer look at what has sparked the hype around these four companies.
Gigamon Inc (NYSE:GIMO) has advanced by over 20% so far on the back of its financial results for the third quarter. The company posted a 44% annual growth in revenue to $56.7 million and an adjusted net income of $0.22 per share, up from $0.04 delivered a year earlier. Gigamon Inc (NYSE:GIMO) also managed to beat the EPS estimates by around $0.05. Among the funds from our database, Gigamon Inc (NYSE:GIMO) is not very popular, with only 24 funds reporting long stakes as of the end of June, however, they amassed around 18% of its outstanding stock at the time, which suggests an overall bullish sentiment. Among them, Thomas Ellis and Todd Hammer’s North Run Capital and Israel Englander‘s Millennium Management held the largest positions, containing 1.45 million shares and 862,746 shares respectively.
We think that the smart money sentiment is an important metric in assessing the long-term profitability on a stock, because hedge funds usually conduct due diligence in their investment process, since they operate with large amounts of capital. Even though collectively, hedge funds have been underperforming the benchmarks for the last couple of months, they had strong returns on the long side of their portfolios. For example, the 15 most popular small-cap picks among the more than 700 hedge funds from our database have outperformed the S&P 500 ETF (SPY) by some 53 percentage points, returning 102% since August 2012 (see more details here).
Celyad SA (ADR) (NASDAQ:CYAD) has also climbed by over 17% after the announcement that the U.S Patent Office had issued a patent related to allogeneic human primary T-Cells engineered to be T-Cell Receptor-deficient and express a Chimeric Antigen Receptor. Celyad SA (ADR) (NASDAQ:CYAD) went public on the NASDAQ in June and has yet to capture the attention of large investors, since only six funds from our database reported stakes equal to 3.80% of its outstanding stock as of the end of June. Despite today’s gains, Celyad SA (ADR) (NASDAQ:CYAD)’s stock is down by 29% since its IPO.
athenahealth, Inc (NASDAQ:ATHN) is up by 25% today, disappointing David Einhorn, the manager of Greenlight Capital, who has been shorting the stock for more than a year (see details). The stock is gaining ground today on the back of better-than-expected results, including EPS of $0.36 and revenue of $236.1 million, compared to the consensus estimates of $0.26 and $232.96 million respectively. Despite the strong results, the stock is overvalued, trading at a huge 800-times earnings, which supports Einhorn’s case. The sentiment towards athenahealth, Inc (NASDAQ:ATHN) among hedge funds is also weak, with only 18 investors having held long positions equal to 6.90% of athenahealth’s outstanding stock at the end of June.
Quality Systems, Inc. (NASDAQ:QSII) is trading 15% in the green at around $14.85 per share, which is a bit lower than its intraday high of $16.00. The jump in the stock price also came on the back of strong earnings for the company’s second quarter of fiscal 2016, ended September 30. Quality Systems, Inc. (NASDAQ:QSII) reported revenue of $125.4 million, up by 4% on the year, while its non-GAAP net income surged to $0.21 per share, from $0.13 a year earlier. A total of 17 funds from our database held long positions in the company, equal to 7.70% of its outstanding stock at the end of June. Among them, Conan Laughlin‘s North Tide Capital reported ownership of 1 million shares of Quality Systems, Inc. (NASDAQ:QSII) in its latest 13F filing.
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