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5 Sizzling Stocks Played Down by Hedge Funds in Q2
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Hedge funds are known for their capability to influence market movements. Their buy and sell decisions are diligently followed by institutional as well as retail investors as they provide clues on the future trajectory of the stock market.
According to data from the latest HFR Global Hedge Fund Industry report, total hedge fund industry capital globally increased by $20.6 billion to a new record of $3.235 trillion at the end of the second quarter.
Moreover, recent regulatory filings show that prominent hedge fund managers are bullish on the U.S. economy despite increasing trade related skirmishes with China, Mexico, the European Union and now Turkey.
Hedge Funds Lay a Wager on Retail and Technology
Per Reuters, most of the hedge fund managers put their bets on retail and tech companies in the second quarter.
David Einhorn’s Greenlight Capital increased stake in retailers Best Buy and Gap, while Chase Coleman’s Tiger Global bought more of Starbucks and Home Depot. Also, Bill Ackman’s Pershing Square Capital raised stake in Mondelez International and Lowe’s Companies.
Meanwhile, Soros Foundation raised its stake in semiconductors Intel and Advanced Micro Devices. Dan Loeb’s Third Point was most optimistic on tech. The fund bought Microsoft, salesforce.com, Electronic Arts, Adobe Systems and payment technology providers Visa and Paypal.
Shocking Strong Buy Omissions
However, FANG stocks, except Facebook , seem to have lost their mojo with these managers.
Fund managers, except Warren Buffett, were somewhat indifferent about Apple (AAPL - Free Report) , the first stock to reach trillion dollars in market capitalization. In fact, Greenlight Capital cut its stake in Apple by 77%, according to 13F Securities filing.
Surprisingly, none of the prominent fund managers bought Amazon (AMZN - Free Report) in the second quarter, while Soros Fund management lowered its stake.
Our Picks
Although hedge funds have turned a blind eye to the below-mentioned stocks, we believe they are worth buying given their solid fundamentals and compelling prospects.
Seattle, Washington-based Amazon is regarded as a pioneer of the e-commerce business model. Its Amazon Web Services currently holds a dominant position in the Infrastructure-as-a-Service market. The company has a market capital of $936.29 billion and its shares have surged 96% in the past year.
Amazon has beaten the Zacks Consensus Estimate in all of the trailing four quarters, the average positive surprise being a jaw-dropping 1347.10%. Moreover, the Zacks Consensus Estimate for 2018 earnings has surged 39.3% to $17.27 in the past 30 days, showing year-over-year growth of 32%.
Moreover, the e-commerce behemoth’s long-term earnings growth is estimated at 26.50%.
San Diego, CA-based Ligand Pharmaceuticals (LGND - Free Report) is a biotechnology company with a market capital of $5.26 billion. The company’s business model is based on developing or acquiring royalty revenue generating assets. The stock has surged 95.4% in the past year.
Ligand has beaten the consensus mark in the trailing four quarters, the average positive surprise being 59.54%. The Zacks Consensus Estimate for 2018 earnings has increased 14% to $5.64 over the last 30 days. The figure reflects year-over-year growth of 73%.
Moreover, long-term earnings are expected to grow 25%.
Headquartered in Sunnyvale, CA, Fortinet (FTNT - Free Report) is a provider of network security appliances and Unified Threat Management network security solutions to enterprises, service providers and government entities worldwide. The company has a market cap of $12.91 billion. The company’s shares have soared 108.7% in the past year.
Fortinet has trumped the Zacks Consensus Estimate in the last four quarters, the average positive surprise being 21.68%. The Zacks Consensus Estimate for 2018 earnings has increased 9.2% to $1.66 in the past 30 days, reflecting a year-over-year rise of 59.6%.
Further, long-term earnings growth is projected at 16.75%.
Long Beach, CA-based Molina Healthcare (MOH - Free Report) is a multi-state managed care organization with market capital of $8.27 billion. The company participates exclusively in government-sponsored healthcare programs such as the Medicaid program and the State Children's Health Insurance Program (SCHIP), catering to low-income persons.
Molina has surpassed the Zacks Consensus Estimate in all of the trailing four quarters, the average positive surprise being a massive 164.2%. The Zacks Consensus Estimate for 2018 earnings has surged 62.3% to $7.50 in the past 30 days.
Shares have jumped 125.2% in the past year. In addition, long-term earnings growth is anticipated at 15.33%.
Based in Oklahoma City, Paycom Software (PAYC - Free Report) is a provider of cloud-based human capital management software as a service solution for integrated software for both employee records and talent management processes. The company has a market capital of $8.08 billion and its shares have rallied 92.4% in the past year.
Paycom has surpassed the consensus estimate in all of the trailing four quarters, the average positive surprise being 26.17%. The Zacks Consensus Estimate for 2018 earnings has risen 4.4% to $2.61, calling for year-over-year growth of 100.77%.
Long-term earnings growth is estimated at 24.82%.
Conclusion
Hedge funds have underperformed the S&P 500 so far this year, according to data from Hedge Fund Research. However, the above-mentioned stocks have not only outperformed the benchmark but also have robust prospects supported by strong industry fundamentals, making them prudent choices for a winning portfolio.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
5 Sizzling Stocks Played Down by Hedge Funds in Q2
Hedge funds are known for their capability to influence market movements. Their buy and sell decisions are diligently followed by institutional as well as retail investors as they provide clues on the future trajectory of the stock market.
According to data from the latest HFR Global Hedge Fund Industry report, total hedge fund industry capital globally increased by $20.6 billion to a new record of $3.235 trillion at the end of the second quarter.
Moreover, recent regulatory filings show that prominent hedge fund managers are bullish on the U.S. economy despite increasing trade related skirmishes with China, Mexico, the European Union and now Turkey.
Hedge Funds Lay a Wager on Retail and Technology
Per Reuters, most of the hedge fund managers put their bets on retail and tech companies in the second quarter.
David Einhorn’s Greenlight Capital increased stake in retailers Best Buy and Gap, while Chase Coleman’s Tiger Global bought more of Starbucks and Home Depot. Also, Bill Ackman’s Pershing Square Capital raised stake in Mondelez International and Lowe’s Companies.
Meanwhile, Soros Foundation raised its stake in semiconductors Intel and Advanced Micro Devices. Dan Loeb’s Third Point was most optimistic on tech. The fund bought Microsoft, salesforce.com, Electronic Arts, Adobe Systems and payment technology providers Visa and Paypal.
Shocking Strong Buy Omissions
However, FANG stocks, except Facebook , seem to have lost their mojo with these managers.
Fund managers, except Warren Buffett, were somewhat indifferent about Apple (AAPL - Free Report) , the first stock to reach trillion dollars in market capitalization. In fact, Greenlight Capital cut its stake in Apple by 77%, according to 13F Securities filing.
Surprisingly, none of the prominent fund managers bought Amazon (AMZN - Free Report) in the second quarter, while Soros Fund management lowered its stake.
Our Picks
Although hedge funds have turned a blind eye to the below-mentioned stocks, we believe they are worth buying given their solid fundamentals and compelling prospects.
All of them sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Seattle, Washington-based Amazon is regarded as a pioneer of the e-commerce business model. Its Amazon Web Services currently holds a dominant position in the Infrastructure-as-a-Service market. The company has a market capital of $936.29 billion and its shares have surged 96% in the past year.
Amazon has beaten the Zacks Consensus Estimate in all of the trailing four quarters, the average positive surprise being a jaw-dropping 1347.10%. Moreover, the Zacks Consensus Estimate for 2018 earnings has surged 39.3% to $17.27 in the past 30 days, showing year-over-year growth of 32%.
Moreover, the e-commerce behemoth’s long-term earnings growth is estimated at 26.50%.
San Diego, CA-based Ligand Pharmaceuticals (LGND - Free Report) is a biotechnology company with a market capital of $5.26 billion. The company’s business model is based on developing or acquiring royalty revenue generating assets. The stock has surged 95.4% in the past year.
Ligand has beaten the consensus mark in the trailing four quarters, the average positive surprise being 59.54%. The Zacks Consensus Estimate for 2018 earnings has increased 14% to $5.64 over the last 30 days. The figure reflects year-over-year growth of 73%.
Moreover, long-term earnings are expected to grow 25%.
Headquartered in Sunnyvale, CA, Fortinet (FTNT - Free Report) is a provider of network security appliances and Unified Threat Management network security solutions to enterprises, service providers and government entities worldwide. The company has a market cap of $12.91 billion. The company’s shares have soared 108.7% in the past year.
Fortinet has trumped the Zacks Consensus Estimate in the last four quarters, the average positive surprise being 21.68%. The Zacks Consensus Estimate for 2018 earnings has increased 9.2% to $1.66 in the past 30 days, reflecting a year-over-year rise of 59.6%.
Further, long-term earnings growth is projected at 16.75%.
Long Beach, CA-based Molina Healthcare (MOH - Free Report) is a multi-state managed care organization with market capital of $8.27 billion. The company participates exclusively in government-sponsored healthcare programs such as the Medicaid program and the State Children's Health Insurance Program (SCHIP), catering to low-income persons.
Molina has surpassed the Zacks Consensus Estimate in all of the trailing four quarters, the average positive surprise being a massive 164.2%. The Zacks Consensus Estimate for 2018 earnings has surged 62.3% to $7.50 in the past 30 days.
Shares have jumped 125.2% in the past year. In addition, long-term earnings growth is anticipated at 15.33%.
Based in Oklahoma City, Paycom Software (PAYC - Free Report) is a provider of cloud-based human capital management software as a service solution for integrated software for both employee records and talent management processes. The company has a market capital of $8.08 billion and its shares have rallied 92.4% in the past year.
Paycom has surpassed the consensus estimate in all of the trailing four quarters, the average positive surprise being 26.17%. The Zacks Consensus Estimate for 2018 earnings has risen 4.4% to $2.61, calling for year-over-year growth of 100.77%.
Long-term earnings growth is estimated at 24.82%.
Conclusion
Hedge funds have underperformed the S&P 500 so far this year, according to data from Hedge Fund Research. However, the above-mentioned stocks have not only outperformed the benchmark but also have robust prospects supported by strong industry fundamentals, making them prudent choices for a winning portfolio.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>