Here’s Why These Stocks Are Trending on Friday

Crude is in the headlines today after Russian President Vladimir Putin said that he supports a production freeze with OPEC. Given that Putin is the most powerful man in Russia, and Russia and OPEC collectively produce almost half of the world’s oil, it’s not surprising that crude futures are 2% in the green.

In this article, we will discuss the latest developments surrounding Lululemon Athletica inc. (NASDAQ:LULU), Apple Inc. (NASDAQ:AAPL), Yum! Brands, Inc. (NYSE:YUM), Alibaba Group Holding Ltd (NYSE:BABA), and McDonald’s Corporation (NYSE:MCD). In addition, we are going to assess what the smart money investors from our database think about the companies in question.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 740 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

Lululemon Reports Soft Earnings

Lululemon Athletica inc. (NASDAQ:LULU) shares are 8% in the red today after the company reported second-quarter earnings of $0.38 per share on revenue of $514.5 million. Although Lululemon’s earnings were in-line with analyst estimates, the company’s sales missed expectations by $0.97 million as comparable sales rose by only 3%. For the full year, management expects between $2.07 and $2.15 in EPS on revenue of $2.325 billion to $2.35 billion. Of the around 750 elite funds we track, 28 funds were long Lululemon Athletica inc. (NASDAQ:LULU) at the end of the second quarter, unchanged from the previous quarter.

Ireland Cabinet Pushes for Appeal 

A few days after the EU Commission ordered the government of Ireland to charge Apple Inc. (NASDAQ:AAPL) up to $14.5 billion in back taxes plus interest, Ireland’s cabinet has agreed to ask the country’s parliament to endorse the appeal next week. Whether Apple will ultimately pay the $14.5 billion is an open question. On one hand, the American government has strongly urged Europe to refrain from taxing American companies in an unfair way. On the other hand, the EC has hinted that it believes its legal case will stand up against any appeal or legal challenge. In the end, many traders believe the two sides will compromise and meet somewhere in the middle. Warren Buffett‘s Berkshire Hathaway is a big shareholder of Apple Inc. (NASDAQ:AAPL), with a position of over 15 million shares at the end of June.

On the next page, we find out why Yum! Brands, Alibaba Group Holding, and McDonald’s Corporation are trending.

Yum! Brands Sells Part of its China division

Yum! Brands, Inc. (NYSE:YUM) is in the spotlight today after the restaurant chain agreed to sell part of its China division to Primavera Capital, a China-based global private equity firm, and Ant Financial Services Group, an entity that Alibaba Group Holding Ltd (NYSE:BABA) holds a substantial economic interest in. According to the terms, the two entities will invest $460 million in Yum! China concurrent with the completion of Yum! China’s spin-off from its parent company, which should occur on October 31. The move helps Alibaba further diversify its economic exposure and raises more money for Yum! Brands. A total of 46 funds tracked by our team owned shares of Yum! Brands, Inc. (NYSE:YUM) and 69 had a bullish position in Alibaba Group Holding Ltd (NYSE:BABA) at the end of June.

PE Firms Join Hands With Chinese Firms for McDonald’s Asian Assets

McDonald’s Corporation (NYSE:MCD) is in the headlines today after Reuters reported that the private equity firms TPG and Carlyle have joined up with two separate Chinese companies to bid for some of McDonald’s restaurants in Hong Kong and China. Carlyle is working with CITIC, while TPG is combining forces with Beijing Capital Agribusiness Group. More participating entities is always good news for McDonald’s. The sale of some of McDonald’s Chinese assets is expected to raise $2 billion to $3 billion. At the end of June, 63 funds from our database had a bullish position in McDonald’s Corporation (NYSE:MCD) at the end of June, down by 20 funds from the previous quarter.

Disclosure: None