Why Tripadvisor, Valeant, and 3 Other Equities Are Making Noise This Morning

With the news that Saudi Arabia plans to cut public-sector wages and subsidies by 2020, crude futures are sticking their neck out above  $50 per barrel in the pre-market. Not surprisingly, the S&P 500 and Dow futures are also firmly positive too. Among the stocks traders are buzzing about today are Priceline Group Inc (NASDAQ:PCLN), Tripadvisor Inc (NASDAQ:TRIP), Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Best Buy Co Inc (NYSE:BBY), and HD Supply Holdings Inc (NASDAQ:HDS). Let’s take a closer look at why these stocks are in the spotlight and see how the world’s greatest funds are positioned among these equities.

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

Bloomberg Article Shines Spotlight on Priceline and Tripadvisor

Two internet tech companies are trending today after Bloomberg writers Tara Lachapelle and Rani Molla wrote an article speculating that industry titan Priceline Group Inc (NASDAQ:PCLN) could potentially acquire Tripadvisor Inc (NASDAQ:TRIP). In the article, the writers note that Priceline shares have been flat since 2014 and that many of the big industry takeover candidates have already been acquired, including Booking.com, Kayak, HomeAway, Orbitz, and Travelocity. Seeing as TripAdvisor is one of the industry’s last major public travel take-over candidates in the United States, the authors speculate that Priceline and competitor Expedia Inc (NASDAQ:EXPE) may both have their eyes on TripAdvisor. With TripAdvisor shares down by 16% year-to-date, the time could be ripe for one of the two giants to potentially make a play. An acquisition wouldn’t be cheap, however, given TripAdvisor’s current 34-times TTM EBITDA valuation. Stephen Mandel’s Lone Pine Capital was a top shareholder of Priceline Group Inc (NASDAQ:PCLN) on March 31, while Jonathon Jacobson‘s Highfields Capital Management was a top shareholder of Tripadvisor Inc (NASDAQ:TRIP).

On the next page, we examine the latest news on Valeant Pharmaceuticals, Best Buy, and HD Supply Holdings.
Valeant Earnings Dissapoint

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is 17% lower in the pre-market after reporting first quarter adjusted earnings of $1.27 per share on revenue of $2.37 billion, missing the consensus estimates by $0.10 per share and $10 million respectively. Adjusted earnings fell by 38% year-over-year despite revenue rising by 9.2% year-over-year. GAAP cash flow from operations rose by 14% year-over-year to $558 million. Soft guidance could also be a reason for the stock’s sharp decline. Management now expects 2016 adjusted EPS of $6.60-to-$7.00 on revenue of $9.9 billion-to-$10.1 billion, well beneath the previous guidance targets of $8.50-to-$9.50 per share in EPS on revenue of $11.0 billion-to-$11.2 billion. Bill Ackman‘s Pershing Square is a major shareholder of Valeant Pharmaceuticals Intl Inc (NYSE:VRX), as well as a board member.

Best Buy Co in the Spotlight After Insider Sale

Shareholders are paying more attention to Best Buy Co Inc (NYSE:BBY) after news broke yesterday that CEO Joly Hubert recently sold 398,000 shares of the company at around $32 per share, leaving Hubert with 511,139 shares. Although the sale might be construed as a sign of less confidence in the company, a PR person for Best Buy has said that the CEO’s sale is for diversification purposes. Best Buy Co Inc (NYSE:BBY) shares have rallied by 5% year-to-date and trade for 10.15-times forward earnings estimates. Of the 766 elite funds that we track, 28 funds owned $552.81 million worth of Best Buy Co Inc (NYSE:BBY) shares, which accounted for 5.30% of the stock’s float on March 31.

HD Supply Holdings Reports Mixed Earnings

HD Supply Holdings Inc (NASDAQ:HDS) reported mixed earnings for its first quarter of fiscal year 2016 ended May 1, with EPS coming in at $0.51 on sales of $1.78 billion, beating bottom-line expectations by $0.05 per share but missing top-line estimates by $60 million. Sales rose by 7.2% year-over-year, led by the company’s construction and industrial segment, whose revenue jumped by 9.8%. Adjusted EBITDA rose by 14% year-over-year to $215 million. The company anticipates adjusted earnings of $0.85-to-$0.90 per share on revenue of $2.00 billion-to-$2.05 billion for its fiscal second quarter. The number of elite funds in our database with holdings in HD Supply Holdings Inc (NASDAQ:HDS) rose by three quarter-over-quarter to 48 as of the end of March.

Disclosure: None