It’s hump day of the second trading week of the new year, and all three major index futures are in the green for the third-straight morning, despite the Shanghai index dipping below the 3,000 mark. Among the stocks on the move are Metlife Inc (NYSE:MET), Ford Motor Company (NYSE:F), Cyberark Software Ltd (NASDAQ:CYBR), and Titan Pharmaceuticals, Inc. (NASDAQ:TTNP). Let’s find out why each stock is trending and how top hedge funds have been trading them of late.
In the eyes of most traders, hedge funds are assumed to be underperforming, old investment tools of the past. While there are more than 8,000 funds in operation at present, hedge fund experts at Insider Monkey look at the aristocrats of this group, around 730 funds. Contrary to popular belief, Insider Monkey’s research revealed that hedge funds underperformed in recent years because of their short positions as well as the huge fees that they charge. Hedge funds managed to outperform the market on the long side of their portfolio (see the details here).
Smaller is better for Metlife Inc (NYSE:MET), as the life insurance giant announced plans to separate a portion of its U.S retail segment to become more nimble and potentially unlock shareholder value. Specifically, Metlife plans to separate General American Life Insurance Company, MetLife Insurance Company USA, Metropolitan Tower Life Insurance Company and several of its subsidiaries that have reinsured risks underwritten by MetLife Insurance Company USA, through either a spin-off, sale, or public offering. The would-be seperated units collectively make up around 20% of the operating earnings of MetLife and would have around $240 billion in total assets. CEO Steven A. Kandarian said:
“We have concluded that an independent new company would be able to compete more effectively and generate stronger returns for shareholders. Currently, U.S. Retail is part of a Systemically Important Financial Institution (SIFI) and risks higher capital requirements that could put it at a significant competitive disadvantage. Even though we are appealing our SIFI designation in court and do not believe any part of MetLife is systemic, this risk of increased capital requirements contributed to our decision to pursue the separation of the business. An independent company would benefit from greater focus, more flexibility in products and operations, and a reduced capital and compliance burden.”
Metlife Inc (NYSE:MET) was in 47 elite hedge funds’ portfolios at the end of September, down by eight funds from the end of June. Its shares have surged by over 7% this morning on the above news.
Ford Motor Company (NYSE:F) is trending after the auto maker reported that its European sales jumped by 10% year-over-year to 1.5 million units and that its adjusted operating profit for 2015 should come in at the higher end of its $10 billion-to-$11 billion guidance range. Moreover, Ford expects its 2016 operating profit, EPS, and automotive revenue to be ‘equal to or higher than 2015’. Traders were evidently expecting something more, however, as Ford Motor Company (NYSE:F) shares are now off by 2.72% in morning trading, after being up by more than 2% in pre-market trading. Hedge fund sentiment around Ford has been stable, with the number of elite funds holding Ford shares rising by two to 38 during the third quarter.
On the next page, we examine the latest concerning Cyberark Software Ltd and Titan Pharmaceuticals Inc.