Here’s Why Traders Are Talking about These Stocks on Monday

The US stock market is trading higher on Monday, as investors try to assess the probability of an interest rate hike in September, following Fed Chair Janet Yellen’s speech at the Jackson Hole summit on Friday.

Meanwhile, five stocks, Amazon.com, Inc. (NASDAQ:AMZN), Herbalife Ltd. (NYSE:HLF), Barrick Gold Corporation (USA) (NYSE:ABX), Mylan NV (NASDAQ:MYL), and Seadrill Ltd (NYSE:SDRL), are making headlines on the back of different developments that we are going to discuss in this article. Moreover, we will take a look at how the smart money investors from our database are positioned towards the companies in question.

At Insider Monkey, we track around 750 hedge funds and other 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).

New FAA Rules Open Skies For Business

Traders are talking about Amazon.com, Inc. (NASDAQ:AMZN) today after the U.S. Federal Aviation Authority clarified acceptable commercial usage practices for drones. According to the rules, commercial drones must fly at or below 400 feet at speeds of 100 miles per hour or less. They must also weigh less than 55 pounds and only operate during the daytime +/- 30 minutes. Analysts expect the new regulations to generate $82 billion in economic activity in the U.S. over the next decade. Many investors also expect the development to help Amazon deliver its products faster in a move that should help the eCommerce giant to take more market share from Wal-Mart Stores, Inc. (NYSE:WMT). Among the investors we track, Andreas Halvorsen’s Viking Global owned 3.28 million shares of Amazon.com, Inc. (NASDAQ:AMZN) at the end of June, down by 5% quarter-over-quarter.

Hedge Fund Drama Around Herbalife Continues

Herbalife Ltd. (NYSE:HLF) is in the spotlight after billionaire Carl Icahn’s Icahn Capital LP added 2.3 million shares to its position, giving Icahn ownership of 20.8% of Herbalife versus 18.3% before. Icahn’s move follows Bill Ackman’s recent assertion that Icahn had offered to indirectly sell some of his stake in Herbalife to him through the investment bank Jefferies. Icahn refuted Ackman’s comments, saying that investment banks ‘frequently make bids for our large positions’ and that he has ‘never given Jefferies an order to sell any of our Herbalife shares’.

“At the time of the disclosure, Ackman declared that I have no interest in increasing my position in Herbalife. This was obviously another misstatement of the facts by Ackman since today I bought another 2.3 million shares,” Icahn said in a statement.

On the next page, we find out why Barrick Gold Corporation, Mylan, and Seadrill are trending.
Barrick Invests in Venezuela

Although many multi-nationals are leaving Venezuela due to the country’s poor finances, Barrick Gold Corporation (USA) (NYSE:ABX) is boldly going the opposite way. According to a Bloomberg article, Barrick Gold has agreed to create a joint venture with the Venezuelan government to potentially develop various mining resources in the country. Although the specifics of the joint venture are hard to come by, President Nicolas Maduro said Venezuela will have a 55% stake in the JV. Given the low oil prices, Venezuela needs other sources of income to prop up its economy. The number of funds tracked by us with holdings in Barrick Gold Corporation (USA) (NYSE:ABX) rose by four quarter-over-quarter to 53 at the end of June.

Mylan Not Favored by Barron’s

According to a recent report, financial magazine Barron’s isn’t a big fan of Mylan NV (NASDAQ:MYL) despite the stock’s cheap valuation. Although Mylan could potentially earn $4.97 this year, giving it a cheap P/E of 8.6, author Jack Hough believes the company’s handling of EpiPen went too far and the controversy could be indicative of future squandered opportunities. Even though the climate for drug price hikes was already poisonous, Mylan decided to increase the price of EpiPen by 15% in May, in a move that likely triggered more media attention around the drug. The increased attention led Mylan to eventually introduce a generic version of the EpiPen, which will be 50% cheaper. The fall-out will hurt Mylan’s EpiPen profits, which account for perhaps one-fifth of the company’s profits. A total of 44 top funds from our database had a bullish position in Mylan NV (NASDAQ:MYL) at the end of the second quarter, down by seven from the previous quarter.

Evercore Maintain Sell Rating for Seadrill 

Analysts at Evercore remain bearish on offshore driller Seadrill Ltd (NYSE:SDRL). Although Brent prices have rallied since the beginning of the month, the analysts maintain their ‘Sell rating’ and $2 price target, citing Seadrill’s substantial maturing debt over the next 12 months. With not enough cash flow to cover the $2.388 billion of debt due in the next 12 months, the analysts expect Seadrill to likely issue more equity or do more debt-for-equity swaps. The potential for more dilution could potentially create an overhang for the stock. The number of funds tracked by us bullish on Seadrill Ltd (NYSE:SDRL) went up by five to 17 during the April-June period.

Disclosure: none