M&A activity continues to be robust, after several major companies announced their intentions to tie the knot today, which has helped push the markets into the green this morning despite sliding oil prices.
In this article, we’ll be taking a closer look at five stocks that are in the spotlight, which are Arista Networks Inc (NYSE:ANET), Lumentum Holdings Inc (NASDAQ:LITE), Macy’s Inc (NYSE:M), Whiting Petroleum Corp (NYSE:WLL), and Oasis Petroleum Inc. (NYSE:OAS). Using the latest 13F data, we’ll also analyze hedge fund sentiment towards each of the five equities.
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).
Traders are watching Arista Networks Inc (NYSE:ANET) after Alex Henderson of Needham reiterated his ‘Buy’ rating on the stock and hiked his price target on it to $110 from $105. The analyst thinks that the fast-paced growth in Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT)’s cloud infrastructure divisions is “strongly suggestive” that demand for Arista’s products will be strong. Henderson’s target price would represent a gain of nearly 30%. Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 17 funds owned $268.65 million in Arista Networks Inc (NYSE:ANET) shares on June 30, down from 26 funds with Arista positions valued at $242.5 million on March 31.
Although its stock is down today by around 4%, likely due to the continued fallout from last week’s rather soft earnings report, Lumentum Holdings Inc (NASDAQ:LITE) also received a vote of confidence from Needham, as the firm raised its price target on the stock to $56 from $50 and maintained its ‘Strong Buy’ rating. Analyst Alex Henderson raised his target for valuation reasons and designates the stock as his ‘Single Best Idea’ in the optical sector. The number of funds in our system with holdings in Lumentum Holdings Inc (NASDAQ:LITE) fell by eight quarter-over-quarter to 25 at the end of June.
On the next page we’ll find out why Whiting Petroleum and Oasis Petroleum are lower today, while Macy’s is in the green.