Although many pollsters and pundits are still in a state of disbelief at the prospect of a Trump Presidency, Wall Street has already moved on and is in bull mode today as all three indexes are higher.
In this article, let’s examine why three banking stocks, one tech company and one oil E&P are on the move. The companies in question are GoPro Inc (NASDAQ:GPRO), Oasis Petroleum Inc. (NYSE:OAS), Wells Fargo & Co (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM), and Morgan Stanley (NYSE:MS) and aside from the developments that put them in the spotlight today, we will take a look at what the smart money investors from our database think about them.
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).
GoPro Inc (NASDAQ:GPRO) shares are 5% in the red after the company announced a recall of around 2,500 Karma drones. Although no property has been damaged and no people have been injured, GoPro is recalling the drones after a small subset lost power during flight. The owners of the drones can return the recalled units for a full refund. Due to the recall, analyst Nick McKay of Wedbush downgraded the stock to ‘Neutral’ from ‘Outperform’ and trimmed his price target to $9 per share from $12. It remains to be seen whether the recall will hurt GoPro’s drone demand in the long run. Among the funds we track, 16 funds owned $124.94 million worth of GoPro Inc (NASDAQ:GPRO)’s stock, which accounted for 8.40% of the float on June 30, versus 16 funds and $96.26 million, respectively, on March 31.
Seeing as Donald Trump is pro-shale and WTI futures are up by 1.5%, it’s not surprising that Oasis Petroleum Inc. (NYSE:OAS) has surged by 6.8% to trade above $12 a piece. With his less-regulation-is-better policy, shale drillers will likely face less environmental regulations that add costs and increase cycle times. If Trump also succeeds in getting Middle Eastern countries to pay more for their security, crude prices could potentially also go up. Higher crude prices will mean more cash flow for Oasis. John Labanowski‘s Brenham Capital Management initiated a 5.2 million share stake in Oasis Petroleum Inc. (NYSE:OAS) in the second quarter.
On the next page, we see why traders are buying Wells Fargo & Co, JPMorgan Chase & Co, and Morgan Stanley.