Although third-quarter U.S. GDP growth clocked in at 2.9% versus analyst estimates of 2.5%, the broader markets are little changed as volatility on the Street remains low.
Among the stocks that are showing considerably more volatility than the broader indexes on Friday are General Electric Company (NYSE:GE), Baker Hughes Incorporated (NYSE:BHI), Senomyx Inc. (NASDAQ:SNMX), Cardinal Health Inc (NYSE:CAH), and AmerisourceBergen Corp. (NYSE:ABC). Let’s take a closer look at the five stocks and see how the funds from our database were positioned towards them.
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).
Baker Hughes Incorporated (NYSE:BHI) and General Electric Company (NYSE:GE) are both in the green by 5% and 1%, respectively, after GE offered to potentially form a partnership with the oil service giant. Nevertheless, Baker Hughes’ surge today pales in comparison to the stock’s rise in after-hours on Thursday when the Wall Street Journal reported that GE was said to be in talks to buy Baker Hughes. General Electric’s Chief Communications Officer Deirdre later dispelled the Wall Street Journal story, telling CNBC that both companies are discussing about potential partnerships and “none of these options include an outright purchase”.
Although it is unclear at the moment what a partnership might mean, it seems that some traders are still bidding Baker Hughes up in hopes that a potential partnership might also entail some sort of equity investment in Baker Hughes. Whether that is actually the case is completely speculation at the moment, however. Among the funds that we track, 44 funds held shares of Baker Hughes Incorporated (NYSE:BHI) and 57 were long General Electric Company (NYSE:GE) at the end of the second quarter.
Senomyx Inc. (NASDAQ:SNMX) shares are off by 46% after PepsiCo, Inc. (NYSE:PEP) said that it won’t be launching a reformulated version of Mug Root Beer with Sweetmyx S617 as an ingredient. Although the beverage giant will use Sweetmyx S617 for a reformulated version of Manzanita Sol in the United States, the Street didn’t like the news and punished Senomyx hard. Mike Malouf of Craig-Hallum downgraded Senomyx to ‘Hold’ from ‘Buy’, and trimmed his target price to $2 from $6, while Serge Belanger of Needham cut his rating to ‘Hold’ from ‘Buy’ as well. Seperately, Senomyx also reported a third-quarter loss of $0.05 per share on sales of $6.02 million, exceeding analyst estimates by $0.02 and $0.66 million, respectively. Richard Mashaal‘s Rima Senvest Management owned 6.3 million shares of Senomyx Inc. (NASDAQ:SNMX) on June 30, unchanged over the quarter.
On the next page, we examine why Cardinal Health and AmerisourceBergen Corp are in the red.