After a three-day weekend, U.S. stocks have started the week on a positive note, with major indices in green teritorry during the first hours of trading. The earnings season in under way again, with two major banks reporting their 2015 fourth quarter results today: Morgan Stanley (NYSE:MS) and Bank of America Corp (NYSE:BAC). Let’s find out how investors reacted to their reports and also find out what got them talking about American International Group Inc (NYSE:AIG), Yahoo! Inc. (NASDAQ:YHOO), and Freeport-McMoRan Inc (NYSE:FCX).
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American International Group Inc (NYSE:AIG) is in the spotlight again as activist Carl Icahn is putting more pressure on the company to break up, pointing to Metlife Inc (NYSE:MET)’s recently announced plans to slim down. In a letter to AIG’s board of directors, Icahn shared his fears that AIG management is not willing to undertake bold steps and will only announce small, incremental changes when their next update is released. He is advocating for AIG to become a “smaller, simpler company,” arguing that a break-up of the company into smaller businesses would rid it of its “systemically important financial institution” label, which implies higher capital requirements. The management of AIG has opposed the proposal, saying a split would lead to a larger tax bill and reduce the potential for cost cutting and freeing up capital.
“AIG continues to take steps to narrow its focus, improve its financial performance, and return capital to shareholders. AIG maintains an active dialogue with shareholders, including Carl Icahn. As previously announced, on January 26, AIG will provide an update on its strategy and its proactive plan to drive shareholder value,” the company said in a recent statement.
American International Group Inc (NYSE:AIG) made the top 15 most popular stocks among the funds we follow, with 94 of them reporting a long position in the stock at the end of September, down from 99 a quarter earlier. John Paulson is also betting big on AIG, having reported a position that amassed 14.6 million shares as of the end of the quarter.
Yahoo! Inc. (NASDAQ:YHOO) is up by 1% today as investors are hoping for a potential sale of the company’s core assets. A recent report by Barron’s suggests the stock could gain as much as 35% should the company proceed to sell its internet business and its stakes in Alibaba Group Holding Ltd (NYSE:BABA) and Yahoo! Japan. Barron’s Andrew Bary believes Yahoo! shares would be worth somewhere between $40 and $47 apiece, should its management give in to investor demands and make those changes, compared with the $30 level the stock is currently at.
A number of hedge funds sought to distance themselves from Yahoo! Inc. (NASDAQ:YHOO) during the third quarter, as the total number of long Yahoo! positions among the funds we track decreased to 89 by the end of September from 104 at the end of the second quarter. On the other hand, Kenneth Mario Garschina’s Mason Capital Management reported a 152% increase to its holding of the stock, to 16.3 million shares, the largest stake among the funds we follow.