Why Himax, Petrobras, Staples, and More Are Trending Today

It’s been a very red day on Wall Street, as the Dow Jones Index is down by over 100 points and the S&P 500 is 0.74% lower, partly on renewed Brexit concerns. Among the stocks trending this afternoon are Himax Technologies, Inc. (ADR) (NASDAQ:HIMX), Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR), International Speedway Corp (NASDAQ:ISCA), Southwest Airlines Co (NYSE:LUV), and Staples, Inc. (NASDAQ:SPLS). Let’s find out why each stock is in the spotlight and see how elite funds are positioned in each of them.

At Insider Monkey, we track over 765 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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Himax Rallies on Guidance

Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) shares have surged by 6.4% after the company announced bullish preliminary second quarter results. For the quarter, Himax expects revenue of $201.1 million, an increase of 11.5% quarter-over-quarter and 18.8% year-over-year. Himax also expects GAAP earnings per diluted ADS of $0.115, up by 51.3% quarter-over-quarter and 125.5% year-over-year. Analysts had been anticipating revenue of around $198.61 million and earnings of $0.095 per share. In addition, Himax has stated that the retirement of its CTO a few days ago won’t “impact the Company’s business and technology development.” Of the 766 elite funds that we track, 27 owned $161.86 million in shares of Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) on March 31, which accounted for 13.50% of the float.

Petrobras Retreats on Lower Crude

Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) is 8% in the red due to lower crude prices. Although the supply and demand picture for the commodity has improved, some traders remain concerned about the impact that the Brexit will have on the global economy. If Britain leaving the EU causes a global recession, demand for crude will fall and crude prices will take longer to recover. Separately, Petrobras has recently put nine shallow-water fields up for sale, as the company seeks ways to trim its greater than $120 billion in debt. 23 top funds in our database were long Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) at the end of the first quarter, down  by one from the end of the prior quarter.

On the next page we examine why International Speedway, Southwest Airlines, and Staples are grabbing headlines today.

International Speedway Reports Earnings

International Speedway Corp (NASDAQ:ISCA) shares have retreated by more than 5% after the company reported second quarter earnings of $0.29 per share on revenue of $167.56 million, missing the bottom-line consensus by $0.03 per share and beating the top-line estimates by $4.56 million. Although admissions revenue fell by 8% year-over-year, motorsport strength helped raise overall revenue by 2.2%. International Speedway Corp (NASDAQ:ISCA) shares are in the red mainly because of weak guidance. The company expects 2016 fiscal year earnings per share of $1.45-to-$1.55, meeting the average analyst estimate of $1.55 only at the very high end of its estimate. Management sees revenue coming in at $658 million-to-$665 million, missing the consensus of $666 million completely. 20 funds in our system owned shares of International Speedway Corp (NASDAQ:ISCA) as of the most recent 13F reporting period.

Barron’s Likes Southwest 

Barron’s published a bullish article on Southwest Airlines Co (NYSE:LUV) this weekend, writing that the company could “soar more than 35%” as its margins grow due to the trend towards more rational pricing. The financial magazine also notes that Southwest has “little to no exposure” to Europe, given that the company flies almost exclusively within the United States. Despite the bullish write-up, shares of Southwest are lower today due to broader sector weakness. 58 elite funds that we track owned shares of Southwest Airlines Co (NYSE:LUV) at the end of the first quarter, up by six funds from the end of 2015.

Staples Considers Pulling out of the United Kingdom

Following the battering of banking and real estate stocks, the latest victim of the Brexit may be some retail sector stocks. According to the Telegraph, Staples, Inc. (NASDAQ:SPLS) is considering leaving the United Kingdom due to declining sales and low profitability in the region. Staples’ UK division currently has 107 stores and the lower British pound and potential recession in the country makes continuing to operate those stores less attractive. The number of elite funds with holdings in Staples, Inc. (NASDAQ:SPLS) rose by three quarter-over-quarter to 52 as of the end of March.

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