Why These 5 Stocks Are Winning on Monday

It’s the first trading day of February and the stock market is in the red after the worst January since 2009. However, there are stocks that are trending in the opposite direction. Among the gainers today are Alere Inc (NYSE:ALR), Facebook Inc (NASDAQ:FB), Twitter Inc (NYSE:TWTR), Netflix, Inc. (NASDAQ:NFLX), and SYSCO Corporation (NYSE:SYY), as investors push up the price of each stock for various reasons. We’ll find out why in this article and also study the sentiment of an elite group of hedge funds towards these stocks.

Imitating hedge funds and other institutional investors can help identify some of the most profitable stocks on the market. However, our extensive research that covered the period between 1999 and 2012, showed that the best approach is to follow these investors into their small-cap stocks. Our backtests showed that the 15 most popular small-cap stocks among hedge funds managed to generate a monthly alpha of 81 basis points, versus an alpha of 0.7 percentage points posted by their top 50 large-cap picks (see more details here).

The first on the list is Alere Inc (NYSE:ALR), whose shares are nearly 45% higher after the announcement of a strategic acquisition in which Abbott Laboratories (NYSE:ABT) agreed to buy the medical test maker for $56 per share, or $5.8 billion. The combined business will increase the drugmaker’s EPS, adding $0.12-to-$0.13 next year and $0.20 in 2018. Moreover, it is expected that pre-tax synergies could reach $500M by 2019. Alere’s debt of $2.6 billion will be assumed by Abbott or refinanced.

Among the funds we follow, 39 reported long positions in Alere Inc (NYSE:ALR) as of the end of September, up by three funds from a quarter earlier, and they amassed 32.5% of the float. Among them, Matt Sirovich and Jeremy Mindich‘s Scopia Capital was the largest shareholder among those, reporting ownership of 4.86 million shares in its latest 13F filing.

Moving on, Facebook Inc (NASDAQ:FB) shares are up by 2% today with no notable news concerning the company. Days ago, the company reported its greatest quarter since mid-2013 and its shares today reached an all-time high. The company reported fourth-quarter earnings of $0.79 per share on revenue of $5.84 billion last week.

Facebook Inc (NASDAQ:FB) lost a little popularity in the third quarter of 2015, as out of the 730 funds that we track, 128 funds held shares of the company on September 30, down from 133 funds on June 30. Stephen Mandel’s Lone Pine Capital was the largest shareholder of Facebook in our system, with 10.7 million shares valued at almost $1.0 billion at the end of September.

Next on our list is Twitter Inc (NYSE:TWTR), whose stock is well in the green on news of a potential deal. The agreement, not yet confirmed, is between venture capitalist Marc Andreessen and private equity firm Silver Lake, and comes after Twitter’s shares touched new lows during the past week. This type of news is not new, as Twitter being acquired has been oft-rumored, and was considered an inevitability by some analysts. With the stock now trading at half of its January 2015 value, the odds of an acquisition continued to increase by leaps and bounds.

During the third quarter, Twitter Inc (NYSE:TWTR) registered a large decrease in popularity among the funds we track, as 27 investors held long positions at the end of September, versus 47 funds a quarter earlier. David E. Shaw‘s D E Shaw was the largest shareholder of Twitter in our system, owning 1.08 million shares valued at $29.1 million at the end of September.

On similar speculative news, Netflix, Inc. (NASDAQ:NFLX) shares have advanced by 4% today, after the streaming service won four SAG Awards on Saturday night, highlighted by Idris Elba being awarded best supporting actor for his performance in the Netflix original film Beasts of No Nation. The Netflix original series’ Orange is the New Black and House of Cards claimed the other three awards, with the former winning two of them. There was also an article on Forbes that Apple Inc. (NASDAQ:AAPL) buying Netflix would make a lot of sense, though the article was speculative and there is no indication that Apple has expressed an interest in buying Netflix.

During the third-quarter, Netflix, Inc. (NASDAQ:NFLX) registered a slight increase in popularity among the funds that we track, with 57 investors holding long positions at the end of September, versus 50 funds at the end of June. Chase Coleman‘s Tiger Global Management reported holding a $1.86 billion position in the stock as of the end of September, comprising 22.9% of its portfolio.

Last on our list is SYSCO Corporation (NYSE:SYY), whose stock has gained almost 7% on an earnings beat. For the quarter ended December 26, SYSCO Corporation reported revenue of $12.2 billion, up by 0.6% year-over-year, in-line with analysts’ expectations, while its earnings per share advanced to $0.48 per share, up by 17.1% year-over-year and beating expectations by $0.07. Nelson Peltz‘s Trian Partners was the largest shareholder of SYSCO Corporation (NYSE:SYY) in our database, reporting ownership of 41.41 million shares in its latest 13F filing.

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