In a week where the S&P 500 inched up only half-a-percent and crude futures fell by almost 6%, shares of several companies cruised to new 52-week highs.
In this article, we take a closer look at five stocks such stock, Alibaba Group Holding Ltd (NYSE:BABA), Yahoo! Inc. (NASDAQ:YHOO), Intel Corporation (NASDAQ:INTC), WPX Energy Inc (NYSE:WPX), and Procter & Gamble Co (NYSE:PG) and use the latest SEC filings to determine how hedge funds positioned themselves in these stocks during the second quarter.
While there are many metrics that investors can assess in the investment process, the hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details here).
Improved Sentiment Drive Alibaba and Yahoo Higher
Alibaba Group Holding Ltd (NYSE:BABA) and Yahoo! Inc. (NASDAQ:YHOO) each hit 52-week highs due to improved sentiment over Alibaba’s prospects. Given that it agreed to sell its internet assets for $4.8 billion, Yahoo is basically a tracker for Alibaba and Yahoo! Japan’s stocks now. Seeing as Yahoo’s Alibaba shares are worth a lot more than its Yahoo! Japan shares, Yahoo shares closely track Alibaba and fortunately for its shareholders, Alibaba has been hot over the past month. Not only has the Shanghai index recovered from its lows to close above 3,000 but Alibaba also reported excellent second quarter results recently, with EPS of $0.74 on revenue of $4.84 billion beating the consensus estimates by $0.11 per share and $300 million respectively. Despite its large size, Alibaba’s revenue grew by an impressive 59% year-over-year and the company’s cloud computing sales rose even faster, by a 156% year-over-year clip to $187 million.
Our data shows that hedge funds were more optimistic on Alibaba in the second quarter, as the number of funds with holdings in Alibaba Group Holding Ltd (NYSE:BABA) rose by two quarter-over-quarter to 69 at the end of June. Meanwhile, 81 funds were long Yahoo! Inc. (NASDAQ:YHOO) at the end of June, down by 16 from the end of the first quarter.
Intel Rises Higher
Intel Corporation (NASDAQ:INTC) reached a new 52-week high on Friday as investors become more optimistic on the semiconductor company’s future prospects. Although the PC market is still in secular decline, Intel has successfully found new growth from the fast-emerging cloud and internet-of-things markets. Intel’s management has also admirably controlled costs and returned substantial capital back to shareholders. 57 funds in our database owned shares of Intel Corporation (NASDAQ:INTC) at the end of the second quarter, up by three funds from the end of the previous quarter.
On the next page we’ll find out why WPX Energy and Procter & Gamble hit 52-week highs last week.