Elon Musk Reveals Master Plan for Tesla and SolarCity; Joy Global, Humana, and Aetna Also Trending

It’s the middle of earnings season and several major stocks are in the news early this morning ahead of the Dow’s attempt at a 9th-consecutive winning session. Among the stocks garnering attention today are Joy Global Inc. (NYSE:JOY), Tesla Motors Inc (NASDAQ:TSLA), SolarCity Corp (NASDAQ:SCTY), Aetna Inc (NYSE:AET), and Humana Inc (NYSE:HUM). We’ll take a closer look at why each company is in the spotlight in this article and use SEC filings to determine how the world’s greatest investors are positioned in each of the five stocks.

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).

Joy Global Sells Itself

Joy Global Inc. (NYSE:JOY) shares are over 17% in the green in pre-market trading after Japan’s Komatsu agreed to buy the company for $3.7 billion in cash in a deal that should close by mid-2017. The buyout terms translate to $28.30 per share in cash. Joy Global shares have gone on a mostly downhill roller coaster ride due to lower global coal and energy prices, sinking by over 70% in 2015. The mining equipment company’s shares surged this year however as its financial condition turned out to be better than expected and sentiment in the commodity sector improved. Of the 766 active funds that we track, 27 funds owned $241.19 million in Joy Global Inc. (NYSE:JOY) positions on March 31, up from 24 funds with $228.80 million in holdings on December 31.

Insurers Still Want to Merge

According to CNBC, Aetna Inc (NYSE:AET) and Humana Inc (NYSE:HUM) are still in negotiations with the Department of Justice over their proposed merger. Some traders fear that the DOJ, which is expected to release its stance on the proposed merger over the next few days, will not approve the deal due to anti-competition concerns.

If the DOJ gives the thumbs down to the merger, the two insurers are reportedly prepared to argue their case in the courts in an effort to get the deal approved. However, by negotiating with the DOJ, there is the probability that the government and the insurers will find some middle ground to get the deal approved if the insurers make enough concessions. Larry Robbins‘ Glenview Capital was a major shareholder of both Aetna Inc (NYSE:AET) and Humana Inc (NYSE:HUM at the end of March.

On the next page we examine Elon Musk’s master plan involving SolarCity and Tesla.

Elon Musk Reveals Master Plan; Uber to Get More Competition

Tesla Motors Inc (NASDAQ:TSLA) is in the spotlight today after Elon Musk revealed his master plan in a blog entry titled Master Plan, Part Deux. According to the plan, Musk wants to “create a smoothly integrated and beautiful solar-roof-with-battery product that just works, empowering the individual as their own utility, and then scale that throughout the world. One ordering experience, one installation, one service contact, one phone app.”

Not surprisingly, for Musk’s master plan to work, Tesla will need to be successful in rallying shareholder support for its proposed buyout of SolarCity Corp (NASDAQ:SCTY). Although many shareholders have thus far been lukewarm on the proposed acquisition, citing the lack of synergies involved, support for the deal could increase now that Mr. Musk has made his intentions clear.

In addition to the solar vision, Elon Musk sees Tesla expanding into the manufacturing of compact SUVs, a new kind of pickup truck, a heavy-duty truck, and a high passenger-density urban transport vehicle, all of which will have fully self-driving and fail-operational capability. Many Tesla owners will also have the option of sharing their vehicles with the push of a button on a Tesla phone app to generate income when the vehicle isn’t needed. That will mean more competition for Uber in the future.

39 top funds in our system were long Tesla Motors Inc (NASDAQ:TSLA) at the end of March, while 23 funds owned shares of SolarCity Corp (NASDAQ:SCTY).

Disclosure: None