Despite the fact that it’s M&A Monday as Wall Street is again in deal-making mode, the broader markets are quiet as all three major indexes are close to flat. In this article, we find out why the spotlight is shining on Harman International Industries Inc (NYSE:HAR), Mentor Graphics Corp (NASDAQ:MENT), Citigroup Inc (NYSE:C), Toyota Motor Corp (ADR) (NYSE:TM), and The Coca-Cola Co (NYSE:KO) and we use 13F filing data to determine elite fund sentiment toward the stocks.
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).
Harman International Industries Inc (NYSE:HAR) shares have surged 25% after Samsung agreed to buy the company for $112 in cash per share, good for a total equity value of around $8 billion. The deal is expected to close in the middle of 2017. Of the 749 elite funds we track, 26 funds owned $485.63 million of Harman International Industries Inc (NYSE:HAR) and accounted for 9.60% of the float on June 30, versus 23 funds and $459.55 million respectively on March 31.
In the second M&A deal of the day, Mentor Graphics Corp (NASDAQ:MENT) has spiked 18% after German engineering giant Siemens agreed to purchase the company for $37.25 in cash per share, or a total of $4.5 billion. Mentor management put the company for sale in part due to pressure from Elliott Management Corp, which owns around 8.1% of the company according to SEC filings. Sahm Adrangi‘s Kerrisdale Capital cut its stake in Mentor Graphics Corp (NASDAQ:MENT) by 56% in the third quarter to 485,861 shares at the end of September.
Citigroup Inc (NYSE:C) shares are 3% in the green after after analysts at Morgan Stanley upgraded the stock to ‘Overweight’ from the previous ‘Equal Weight’. The investment bank also hiked its price target to $70 per share from the previous $50. Morgan Stanley upgraded the stock because it thinks the Trump/Republican agenda of lower regulation, less taxes, and higher growth could really benefit the entire financial sector. Although Citi’s shares have lagged its peers due to DTA write-down concerns, the analysts don’t think the potential write-down will affect Citigroup’s overall strong capital payback to shareholders. The number of elite funds with holdings in Citigroup Inc (NYSE:C) fell by 4 quarter-over-quarter to 97 at the end of June.
On the next page, we examine Toyota Motor Corp (ADR), and The Coca-Cola Co.