Why These Five Stocks Are Gaining Today

After a ‘flattish’ Thursday, markets were surging on Friday, with all major US stock indexes up by more than 1%. Among the stocks accompanying the rise in the markets, we could highlight Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA), Finisar Corporation (NASDAQ:FNSR), Southwestern Energy Company (NYSE:SWN), Seadrill Ltd (NYSE:SDRL) and Weatherford International Plc (NYSE:WFT), all of which were trading up by double digits. So, let’s take a look at the events behind these moves and see what the hedge funds in our database think about these companies.

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 the stocks that interest us, let’s start with Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA), whose stock is trading up by more than 16% on Friday. After the market closed on Thursday, the beauty retailer posted earnings of $1.69 per share, $0.15 above the Street’s consensus estimate, on revenue of $1.27 billion, up by 21% year-over-year, and $40 million ahead of expectations. The guidance also surprised analysts and investors as the management said it expects first-quarter earnings in the range of $1.25 to $1.30 per share on revenue between $1.02 billion and $1.03 billion. Analysts, on the other hand, forecast earnings of $1.23 per share on revenue of $1.01 billion. In addition the company announced a new $425 million share repurchase program, and plans to enter a $200 million “accelerated” buyback program.

Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) is quite popular among the funds that we track. At the end of the fourth quarter of 2015, the company saw 31 funds with long positions equal to more than 15% of its outstanding stock. Among them, we could point out Stephen Mandel’s Lone Pine Capital, which last disclosed ownership of 3.57 million shares, worth more than $661 million at the end of December.

Next up is Finisar Corporation (NASDAQ:FNSR), whose stock has gained almost 19% after beating the earnings estimates and providing a solid guidance. The small-cap optical subsystems and components provider reported earnings of $0.25 per share, $0.03 above expectations, on revenue of $309.2 million, which, however, missed the estimates by $2.77 million. Guidance for the current quarter was also strong with EPS in the range of $0.22 to $0.28, versus a consensus estimate of $0.21, and revenue between $307 million and $327 million, in line with the $314.7 million expected by analysts.

A total of 20 firms among those we track disclosed long equity stakes in Finisar Corporation (NASDAQ:FNSR) as of December 31; these positions accounted for more than 15% of the company’s outstanding stock. Among them, the largest shareholder was Ken Fisher’s Fisher Asset Management, which owns 4.04 million shares, according to its latest 13F filing.

Shares of Southwestern Energy Company (NYSE:SWN) were up by roughly 12% on Friday afternoon as oil prices rose. Brent gained about 1%, while WTI Crude surged by 2.3%. The increase in oil prices not only helped to push higher the stocks of Southwestern and other energy companies, but also lifted the market as a whole.

At the end of the fourth quarter, Southwestern Energy Company (NYSE:SWN) saw 32 hedge funds from our database holding shares, including Andreas Halvorsen’s Viking Global, which disclosed ownership of 11.67 million shares as of the end of last year and further increased its stake, to 35.51 million shares, in January.

Seadrill Ltd (NYSE:SDRL)’s stock also gained more than 12% on Friday trading on the back of the surge in oil prices. However, the rise in the stock price was also aided by the announcement of the company’s fourth quarter financial results, which were made public on Thursday evening. And, while the figures were lower than usual, investors were expecting this, and were instead contempt with other elements in the report, which proved the company’s resilience amidst the downturn in the industry; cost cutting initiatives have allowed it to preserve its margins even though revenues declined considerably. Revenue fell to $959 million in the fourth quarter from $1.26 billion reported a year earlier, and EBITDA declined to $513 million from $672 million. However, the EBITDA margin of 53% was the same as the one seen a year ago.

Probably happy with the Seadrill Ltd (NYSE:SDRL)’s recent performance (the stock has gained more than 146% over the past month) are Peter Rathjens, Bruce Clarke and John Campbell. Their fund, Arrowstreet Capital, last declared holding 4.98 million shares of the company, after almost doubling its exposure during the fourth quarter of 2015.

Finally, there’s Weatherford International Plc (NYSE:WFT), up about 10% on Friday afternoon. It seems like the surge was driven by a Goldman Sachs upgrade. The firm boosted its rating to ‘Buy’ from ‘Neutral’, while increasing its price target to $9.75 from $8.00. The report argued that the company is likely to benefit from a recuperation in land drilling in the U.S. as the cycle turns.

Among the funds long Weatherford International Plc (NYSE:WFT), we should highlight Ken Griffin’s Citadel Investment Group. Over the fourth quarter of 2015, the firm almost quadrupled its exposure to the stock, taking its holding to 22.43 million shares, valued at roughly $188 million at the end of 2015.

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