Why PayPal (PYPL), Facebook (FB), and 3 Other Stocks Are Skyrocketing Today

Major U.S stock indexes are up slightly on Thursday as the markets continue to recuperate from their terrible start to 2016. Among the stocks driving the gains are Neos Therapeutics Inc (NASDAQ:NEOS), Under Armour Inc (NYSE:UA), Facebook Inc (NASDAQ:FB), Cirrus Logic, Inc. (NASDAQ:CRUS), and Paypal Holdings Inc (NASDAQ:PYPL), all of which are up substantially in Thursday trading. Let’s take a look at the events behind the strong move by these stocks, and at what the top hedge funds in our database think about these companies.

The smart money sentiment is an important metric that can be used to assess the long-term profitability of a stock. While there are thousands of stocks trading daily on the market, taking a look at what hedge funds think about certain companies can narrow down the search significantly. At Insider Monkey, we track more than 700 hedge funds, whose 13F filings we analyze as part of our small-cap strategy. Our research has shown that imitating a portfolio that includes the 15 most popular small-cap stocks among hedge funds can outperform the market by as much as 95 basis points per month on average (see more details here).

Back to Thursday’s gainers, there’s Neos Therapeutics Inc (NASDAQ:NEOS), which is up by almost 40% in the early afternoon, after the FDA approved the company’s Adzenys XR-ODT for the treatment of ADHD in patients aged six and above. This makes Adzenys XR-ODT the first and only extended-release, orally disintegrating tablet for the treatment of attention-deficit hyperactivity disorder (ADHD).

Among the funds in our database, nine disclosed long stakes in Neos Therapeutics Inc (NASDAQ:NEOS) as of the end of the third quarter. Michael Castor’s Sio Capital was the hedge fund with the largest position of those nine firms, holding 666,729 shares, which accounted for roughly 4.2% of the company’s total outstanding shares.

Next up is Under Armour Inc (NYSE:UA), up by almost 20% following its fourth quarter earnings call this morning. Before the market opened today, the company announced earnings of $0.48 per share on revenue of $1.17 billion for the quarter, beating the Street’s consensus estimate of $0.46 in earnings per share and $1.12 billion in revenue. Upbeat guidance has also helped drive the stock up.

Among the funds that we keep track of, one seemed particularly bullish on Under Armour Inc (NYSE:UA): Donald Chiboucis’ Columbus Circle Investors. Over the third, the firm disclosed ownership of more than 2 million shares, which accounted for almost 1% of the apparel company’s total outstanding stock.

On the next page, we will examine the reasons behind the big gains seen in the shares of Facebook Inc (NASDAQ:FB), Cirrus Logic, Inc. (NASDAQ:CRUS), and Paypal Holdings Inc (NASDAQ:PYPL).

Facebook Inc (NASDAQ:FB) is trading up by almost 16% and close to its all-time high, in the afternoon hours. The social media giant reported fourth quarter earnings of $0.79 per share, $0.11 above the Street’s consensus. Revenue of $5.84 billion also easily beat analysts’ consensus estimate of $5.36 billion, largely driven by a 57% rise in advertising revenue. Several analysts noted that this was the greatest quarter that the company has delivered since mid-2013.

2015 was a great year for Facebook Inc (NASDAQ:FB). However, it seems like some hedge funds did not envision even better times ahead. Consequently, the number of major hedge funds that disclosed long stakes in the company as of the end of the third quarter of 2015 (128 out of about 730 that we track) was almost 4% lower than in the previous quarter. Nonetheless, the largest hedge fund shareholder of record, Stephen Mandel’s Lone Pine Capital, increased its position by 10% to 10.7 million shares worth almost $1.0 billion.

Cirrus Logic, Inc. (NASDAQ:CRUS) was another big gainer on Thursday, up by more than 14.5% after the company beat expectations for its third quarter of fiscal year 2016. The small-cap integrated circuits maker delivered earnings of $0.82 per share, $0.01 above consensus estimates, on revenue of $347.86 million, about $1.0 million higher than expected. It should be noted, however, that sales came in at the low end of management’s guidance of $347 million-to-$400 million.

It seems like a few hedge funds saw the good times coming. For instance, Joel Greenblatt’s Gotham Asset Management, the largest hedge fund investor of record in our database, increased its exposure to Cirrus Logic, Inc. (NASDAQ:CRUS) by 50% in the third quarter, disclosing ownership of almost 1.14 million shares, or almost 1.8% of the total outstanding shares.

Finally, there’s Paypal Holdings Inc (NASDAQ:PYPL), up by about 7.65% following its own earnings call. For the fourth quarter, the company posted earnings of $0.36 per share, $0.02 above estimates, on revenue of $2.56 billion, versus expectations for $2.51 billion in revenue. Another element aiding the surge in the stock price was the enormous $2 billion share repurchase program that the company approved. This “not only represents over 5% of the company’s market cap but can be seen as a signal that management views shares as undervalued at current levels,” Jim Cramer and Jack Mohr explained in an article on TheStreet.

Paypal Holdings Inc (NASDAQ:PYPL) had 87 funds in our system with long positions at the end of the third quarter, following its spinoff from eBay Inc (NASDAQ:EBAY) at the beginning of that quarter. eBay, which announced its own financial results for the holiday quarter today did not fare nearly as well, and ranks as one of the day’s biggest losers. Carl Icahn’s Icahn Capital LP, which pushed for that spinoff, declared holding 46.27 million shares of PayPal, worth about $1.43 billion as of the end of September.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned in this article.