Why Investors Are Buzzing about BlackBerry, IBM, Deutsche Bank, and Others

Although the Nikkei 225 fell over 1.3% last night, the U.S. stock market is rather quiet, as all three index futures are hugging the flat line.

In this article, we analyze some companies that traders are currently watching, including several tech companies and three financial ones, BlackBerry Ltd (NASDAQ:BBRY), Moody’s Corporation (NYSE:MCO), International Business Machines Corp. (NYSE:IBM), Deutsche Bank AG (USA) (NYSE:DB), and Royal Bank of Scotland Group PLC (NYSE:RBS). Without further elaboration, let’s dig in, and also see what the smart money thinks of each stock.

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BlackBerry Ltd (NASDAQ:BBRY) shares have surged in extended market trading after the company reported its fiscal second-quarter results. For the time period, Blackberry broke even, versus analyst estimates of a loss of $0.05 per share. Revenue was $352 million, down by 28.3% year-over-year, and $41.75 million below the consensus estimate. Exciting investors today is the news of a strategy shift. CEO John Chen said: “We are focusing on software development, including security and applications. The company plans to end all internal hardware development and will outsource that function to partners. This allows us to reduce capital requirements and enhance return on invested capital”. BlackBerry Ltd (NASDAQ:BBRY)’s management sees software and service sales growth of 30% for the full fiscal year. The company also upped its adjusted EPS outlook for the time period to between flat and a loss of $0.05 per share, versus the current consensus of a loss of $0.15 per share. Prem Watsa‘s Fairfax Financial Holdings reported a holding of over 46.7 million shares of BlackBerry Ltd (NASDAQ:BBRY) as of the end of June.

Moody’s Corporation (NYSE:MCO) is in the spotlight after the company raised its outlook for the full 2016. For the period, the company now expects adjusted EPS of $4.55 to $4.65, versus the average analyst estimate of $4.58, while GAAP EPS is estimated between $4.70 and $4.80, mostly due to a non-cash forex gain. Shares of the company are up by 11% year-to-date so far. Of the around 749 top funds that we track, 34 were long Moody’s Corporation (NYSE:MCO) at the end of the second quarter.

On the next page, we examine International Business Machines Corp, Deutsche Bank AG (USA), and Royal Bank of Scotland Group PLC.

International Business Machines Corp. (NYSE:IBM) is hogging the headlines after The New York Times reported that IBM’s Watson’s next task will be to help teachers better teach third grade math. Watson, an artificial intelligence program, had previously beat various famous contestants on Jeopardy and helped doctors with medical diagnoses. For its latest task, IBM exec Stanley S. Litow said, ‘The idea was to build a personal adviser, so a teacher would be able to find the best lesson and then customize the lesson based upon their classroom needs’. This trend of allowing AI to do more and more underscores the technology’s potential and the eventual need of the existing labor force in many sectors to readjust. A total of 53 funds from our database owned shares of International Business Machines Corp. (NYSE:IBM) at the end of the second quarter, unchanged from that of the previous quarter.

According to Die Zeit quoted by Reuters, Germany’s government is prepping a contingency rescue plan for Deutsche Bank AG (USA) (NYSE:DB) in the case that the bank can’t raise enough capital to pay for its various litigation expenses, such as the $14 billion that the DoJ recently asked for in return for settling mortgage-related cases dating back to the financial crisis. Under the draft plan, Deutsche Bank would be allowed to sell its assets to other lenders at certain prices that won’t hurt it (not fire sale). In the worst case scenario, the German government could even take a 25% stake. Although the German government has said it won’t bail out the bank, the new stance is understandable. Deutsche Bank doesn’t exactly have the best capital levels in the world and Germany can’t afford another 2008 financial crisis. At the end of June, 15 funds tracked by Insider Monkey owned shares of Deutsche Bank AG (USA) (NYSE:DB).

In other banking news, Royal Bank of Scotland Group PLC (NYSE:RBS) is making headlines after it agreed to pay $1.1 billion to settle allegations with certain U.S. regulators that the bank mis-sold mortgage-backed securities to certain corporate credit unions. Not surprisingly, RBS does not admit any fault. Nine investors followed by our team had a bullish position in Royal Bank of Scotland Group PLC (NYSE:RBS) at the end of the second quarter, down by one from the previous quarter.

Disclosure: None