Given that analysts can often affect short term sentiment, we at Insider Monkey have put together a list of recent Wall Street analyst commentary concerning five stocks, Reynolds American, Inc. (NYSE:RAI), MGP Ingredients Inc (NASDAQ:MGPI), Alkermes Plc (NASDAQ:ALKS), Cyberark Software Ltd (NASDAQ:CYBR), and Proofpoint Inc (NASDAQ:PFPT).
Let’s take a closer look at the commentary and also see how the investors from our database traded the stocks during the second quarter.
Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 745 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).
Although it rallied 14% on Friday, Bonnie Herzog of Wells Fargo thinks there is a probability that Reynolds American, Inc. (NYSE:RAI) could go higher as she questions whether $56.40 per share is high enough to convince Reynolds’ board and shareholders to sell the company to British American Tobacco. If it isn’t, Herzog thinks Reynolds could ask for more. Herzog has an ‘Overweight’ rating on the tobacco sector and an ‘Outperform’ rating on Reynolds. Among the funds we track, 40 funds owned $1.47 billion worth of Reynolds American, Inc. (NYSE:RAI)’s shares, which accounted for 1.90% of the float on June 30, versus 39 funds and $1.69 billion, respectively, on March 31.
When MGP Ingredients Inc (NASDAQ:MGPI)‘s stock fell sharply on Friday afternoon due to reports of a chemical accident in Kansas, SunTrust analyst William Chappell thought the pullback was an ‘overreaction’ as apparently all the associated injuries were rather minor. Chappell said the dip was a buying opportunity and maintained his ‘Buy’ rating on the stock. It turned out that the market largely agreed with Chappell, as MGP Ingredients subsequently rallied from $34 to close at $38.81 per share. The number of funds from our database with holdings in MGP Ingredients Inc (NASDAQ:MGPI) rose by two quarter-over-quarter to seven at the end of June.
On the next page, we examine what analysts had to say about Alkermes Plc, Cyberark Software Ltd, and Proofpoint.