Tech Models Continue Strong Growth

New York (HedgeCo.Net) It is that time again when the earnings reports are being released in abundance as we have entered the latest earnings season. This past week was a big one for the technology sector as well as the financial sector. In the tech sector there were earnings reports from the likes of Advanced Micro Devices, Intel, eBay, Google and Netflix. Of these five stocks, only AMD disappointed investors with their earnings report.
In the financial sector, last week’s earnings reports included CitiGroup, Goldman Sachs, Bank of America, JP Morgan and Wells Fargo. Of these five, only Goldman disappointed investors when the company took a big charge during the quarter, but even then the reaction wasn’t a big deal.

Through last Thursday morning, there had been 49 stocks in the S&P that reported so far this quarter and 75.5% of them had beaten their earnings estimates. The results were not as good on the top-line revenue results with only 34.7% of the companies beating their revenue estimates.

This week will be another busy week for earnings and it is another big week for tech stocks with reports expected from Apple, Microsoft, IBM, Texas Instruments and Amazon. Given the number of tech stocks reporting, the three composite models HedgeCoVest offers on the sector should be relatively busy this week. The offerings include the HedgeCoVest Technology Long-Only model, the HedgeCoVest Technology Long/Short model and the HedgeCoVest Technology Short-Only model. These three models showed YTD gains on Friday of 2.87%, 4.02% and 2.8%, respectively.

It is interesting that all three models are up for the year, especially when you consider that the Technology Select Sector SPDR (XLK) is up over 5% on the year. With a return for the sector like that, you might have thought the short-only model and the long/short model would be down for the year or closer to breakeven, but the performance has to be attributed to the talented group of managers on the HedgeCoVest platform.

It seems that during each week of the earnings season there is usually one sector that stands out for the number of companies reporting. With that in mind, the sector specific composite models can come in to focus and they can be used to help investors that are looking for a hedge for a specific sector. If the investor has a tech-heavy portfolio and they are concerned about the earnings season, they could potentially invest in the long/short model or the short-only model to give them peace of mind and some downside protection should the sector as a whole move down as the result of earnings reports. This could be the case for any of the seven sectors where we offer either a long/short model or a short-only model.

Rick Pendergraft
Research Analyst
HedgeCoVest

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