Why Costco, Wells Fargo, Petrobras, Cabelas, and More Are Making Headlines

Despite crude prices stabilizing now that OPEC has agreed to limit/cut production, many investors are on edge given the uncertainties in Europe and elsewhere in the world.

Among the stocks in the spotlight on the last day of the third quarter are Costco Wholesale Corporation (NASDAQ:COST), CalAmp Corp. (NASDAQ:CAMP), Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR), Wells Fargo & Co (NYSE:WFC), and Cabelas Inc (NYSE:CAB). Let’s analyze why each company is trending and see what the smart money thinks of each of the five stocks.

At Insider Monkey, we track over 750 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).

Costco Wholesale Corporation (NASDAQ:COST) shares are nearly 4% in the green this morning after the retailer reported earnings of $1.77 per share for its fiscal year 2016 fourth quarter, beating the Street’s estimate by $0.04. Revenue for the period was $35.73 billion, up by 2.1% year-over-year and $1.08 billion below the consensus estimate. Although revenue missed expectations, analysts took solace in the company’s ex-gas, ex-forex comparable-store sales increase of around 3% for the fiscal quarter. Of the 749 top funds that we track which filed 13Fs for the June reporting period, 39 of them had a long position in Costco Wholesale Corporation (NASDAQ:COST) at the end of the second quarter, down by four funds from the end of the first quarter.

CalAmp Corp. (NASDAQ:CAMP) is 14% in the red after reporting disappointing fiscal 2017 second quarter earnings. Although the company’s bottom-line of $0.27 per share met the average analyst estimate, CalAmp’s top-line of $90.5 million missed the Street’s estimate by $1.76 million. Sales rose by 9.6% year-over-year, while consolidated gross margin came in at 42%. Due to tough macro conditions, CalAmp’s management was cautious in terms of guidance for the very near term, with expectations of adjusted EBITDA of $11 million-to-$14 million and adjusted net income of $0.24-to-$0.30 per share for its fiscal third quarter. The number of funds in our database with holdings in CalAmp Corp. (NASDAQ:CAMP) rose by two during the second quarter to 17 at the end of June.

On the next page, we’ll examine why Petrobras, Wells Fargo, and Cabelas are in the spotlight.

Traders are watching Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) today after Reuters reported that the Federação Única dos Petroleiros union, Brazil’s largest oil workers union, rejected a labor contract offer from Petrobras on Thursday. If the two sides do not find some common ground, the labor union could potentially go on strike. Petrobras’ management is caught between a rock and a hard place, due to the desire to cut costs as much as possible in light of the company’s massive debt load, while coming up against the needs of its workers in country, which is witnessing rapid inflation. 23 funds in our system had a long position in Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) at the end of June, unchanged from the end of the March quarter.

Although he has said that he won’t comment on Wells Fargo & Co (NYSE:WFC) until after the election, the Oracle of Omaha made an exception on Thursday. In response to CNBC’s Becky Quick, Warren Buffett said that he had spoken to CEO John Stumpf for five minutes and told him that “the problem was bigger than he thought.” Buffett’s spokesperson also added that recent rumors claiming that he expressed “extreme dissatisfaction” to the bank’s Board of Directors regarding the false accounts scandal were false. Buffett’s Berkshire Hathaway owned 480 million shares in Wells Fargo & Co (NYSE:WFC) on June 30.

Wrapping up our coverage of some of the morning’s top trending stocks, we come to Cabelas Inc (NYSE:CAB), which is currently the target of two different groups of bidders. According to Reuters, two different groups have emerged to potentially make binding acquisition offers for the company. The first is the usual suspect, Bass Pro Shops, along with Goldman Sach’s private equity division, while some other banks have interest in Cabelas’ credit card segment. The second is private equity firm Sycamore Partners, which has partnered up with Synchrony Financial (NYSE:SYF). According to Reuters, the deadline for binding bids is this week. 27 funds in Insider Monkey’s database owned almost one-fifth of Cabelas Inc (NYSE:CAB)’s float as of the most recent 13F reporting period.

Disclosure: None