Tesla Accused of Pushing the Safety Envelope, Plus the Latest on Apple, Coca-Cola, and More

After several volatile days, the markets are quiet this morning, as all three major index futures are modestly in the green. Although macro worries still abound, many traders believe that there is a considerable chance that the Fed will leave interest rates the same during the next FOMC meeting on September 20 and 21.

Among the stocks in the headlines today are The Coca-Cola Co (NYSE:KO), Apple Inc. (NASDAQ:AAPL), Mobileye NV (NYSE:MBLY), Tesla Motors Inc (NASDAQ:TSLA), and Walt Disney Co (NYSE:DIS). Let’s take a closer look at why these major companies are in the news and use the latest 13F data to see how  successful hedge funds have been trading them.

Our research 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).

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The Coca-Cola Co (NYSE:KO) is in the spotlight today after the Wall Street Journal reported that various beverage companies have sued to prevent the city of Philadelphia from imposing what is basically a soda tax. Philadelphia was the first major city in America to pass such a tax, in June of this year, and analysts estimate that the tax could raise soda prices by around 31% on average. If Philadelphia succeeds, other cities could follow, which would severely hurt Coca-Cola’s profit in the United States. Critics of soda say that the drink is not as healthy as other types of non-alcoholic beverages. Warren Buffett‘s Berkshire Hathaway owned 400 million shares of The Coca-Cola Co (NYSE:KO), with the position accounting for almost 14% of the value of the legendary manager’s equity portfolio at the end of June.

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It looks like demand for the new iPhone is lights out, as Apple Inc. (NASDAQ:AAPL) recently confirmed what many analysts suspected: that the tech giant has sold out of the iPhone 7 Plus already. In addition, the jet black iPhone 7 is also sold out. Given that the iPhone accounts for the majority of Apple’s profit, the company will need its iPhones to continue to sell in order for investors to get the return that they expect. In conjunction with the latest news, analysts at Credit Suisse raised their 2016 and 2017 EPS estimates for the company to $8.22 and $10.09 respectively, from the previous targets of $7.95 and $9.84. The analysts have an ‘Outperform’ rating and $150 price target on Apple shares. The number of funds in our database with holdings in Apple Inc. (NASDAQ:AAPL) fell by 36 during the second quarter to 116 at the end of June.

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On the next page, we’ll examine the comments from Mobileye concerning Tesla, as well as the latest on Walt Disney.

Mobileye NV (NYSE:MBLY) threw some unexpected criticism at Tesla Motors Inc (NASDAQ:TSLA) recently, after the software company’s Chairman said that one of the reasons his company broke off ties with Tesla was due to the car manufacturer “pushing the envelope in terms of safety.” Mobileye CTO Amnon Shashua added the following about Tesla’s autopilot assistance system:

“It is not designed to cover all possible crash situations in a safe manner. No matter how you spin it, [Autopilot] is not designed for that. It is a driver assistance system and not a driverless system.”

Tesla has previously been criticized for adopting semi-autonomous driving technology too soon after one of its customers died in a crash when using the ‘autopilot’ feature in May. Elon Musk and Co have said that the company will release an update in the coming weeks that would have been able to prevent that accident. To Musk, autonomous technology saves substantially more lives than it costs on average. 25 hedge funds that we track were bullish on Mobileye NV (NYSE:MBLY) at the end of June, while 36 owned shares of Tesla Motors Inc (NASDAQ:TSLA).

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Traders are talking about Walt Disney Co (NYSE:DIS) today after the company announced that it will lay off around 250 employees, or 5% of its workforce in its consumer products and digital media division. Some of the layoffs will occur in Disney’s video game production division, as Disney’s management strives to move the company towards lower-risk licensing rather than developing in-house titles. The belt-tightening in good times shows that the company’s management is dedicated to delivering returns to shareholders. 44 funds in our system owned shares of Walt Disney Co (NYSE:DIS) as of the June 13F reporting period, down by five funds from the March reporting period.

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Disclosure: None