It’s M&A Monday as Pfizer Inc. (NYSE:PFE), Anacor Pharmaceuticals Inc (NASDAQ:ANAC), Range Resources Corp. (NYSE:RRC), and Memorial Resource Development Corp (NASDAQ:MRD) each participated in meaningful M&A events that caused each stock to trend. In addition, big news concerning Apple Inc. (NASDAQ:AAPL) has also sent shares of the tech giant up today. Let’s take a closer look and see how the smart money is positioned in each stock.
Given that Insider Monkey has done a lot of research into what the smart money likes and doesn’t like, let’s also analyze relevant hedge fund sentiment toward the stocks. At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).
Apple Gets Some Love From Berkshire
Although Carl Icahn sold out of Apple Inc. (NASDAQ:AAPL) due to concerns that the Chinese government might make it difficult for the tech giant to do business in the country, billionaire Warren Buffett apparently isn’t as concerned. According to its recent 13F filing with the SEC, Berkshire Hathaway acquired 9.8 million shares in Apple Inc. (NASDAQ:AAPL) during the first quarter. That gives Buffett’s company a stake of around $1 billion. The purchase of Apple is notable because Buffett has long said that he doesn’t invest in new tech companies. Berkshire’s bet in Apple is bullish for the stock because it shows that the world’s greatest investor thinks that the company has a sustainable moat and is undervalued. Shares of Apple opened over 2% in the green today. Apple has also recently tried to smooth things over with the Chinese government by agreeing to invest $1 billion in leading Chinese ride sharing app, Didi Chuxing. Investors hope that Apple’s willingness to invest in Chinese startups will help the company remain in the government’s good graces. That would help Apple maintain its very profitable China business. In our database, Berkshire trails Ken Fisher’s Fisher Asset Management, which owns 11.32 million shares of Apple as of the end of March.
Pfizer Buys Anacor
Pfizer Inc. (NYSE:PFE) and Anacor Pharmaceuticals Inc (NASDAQ:ANAC) are trending today after Pfizer agreed to buy Anacor Pharmaceuticals Inc (NASDAQ:ANAC) for $4.45 billion or $99.25 per share in cash. Pfizer Inc. (NYSE:PFE) has fallen 0.6% on the news while Anacor shares have surged 54% in pre-market trading. Although it is a cash flow machine, Pfizer has several drugs that face the patent cliff in the coming years, and the giant needs new drugs to sustain its earnings. Although it has a promising pipeline, the company has used M&A to supplement its growth before, and the Anacor acquisition will certainly help. Anacor’s main drug, crisaborole, which is currently under FDA review for the treatment of mild and moderate eczema, could potentially realize peak sales of $2 billion a year. Among the funds we track, Ken Fisher’s Fisher Asset Management is a major shareholder of Pfizer while Mark Kingdon’s Kingdon Capital owns a substantial position in Anacor Pharmaceuticals.