On the first day of the trading week, crude oil is almost 2% lower on profit-taking and the major indexes are mostly flat. Among the stocks in the spotlight on the first day of the week are First Data Corp (NYSE:FDC), Anthem Inc (NYSE:ANTM), CIGNA Corporation (NYSE:CI), CF Industries Holdings, Inc. (NYSE:CF), and Valeant Pharmaceuticals Intl Inc (NYSE:VRX). Let’s find out why each stock is trending and analyze how the smart money is positioned in each stock.
Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 700 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).
Barron’s Likes First Data
First Data Corp (NYSE:FDC) is 4% in the green after Barron’s published a column over the weekend calling for a 70% upside. The author noted that after the company’s IPO is 2015, First Data Corp is strengthening its balance sheet by paying down debt and postponing maturities. The company is also improving its technology and betting on its new platform, Clover, which helps small businesses manage their payments easier, and which should help First Data retain its customers better. The author thinks the stock has substantial upside due to the debt and technology improvements and due to the fact that First Data trades at a forward P/E of under 8 when some of the company’s competitors trade for valuations of 16 or higher. Out of the 766 elite funds that Insider Monkey tracks, 17 owned shares of First Data Corp (NYSE:FDC) at the end of March, down by three over the quarter.
Bickering Behind the Scenes In the Merger Between Anthem and CIGNA
Anthem Inc (NYSE:ANTM) and CIGNA Corporation (NYSE:CI) are trending today after The Wall Street Journal published an article stating that the two companies are arguing behind the scenes as they seek government approval for their merger. Because the two companies aren’t on the same page, the quarrels could potentially derail or delay the antitrust approvals. Each company is arguing because they think the other has violated some of their merger agreement stipulations and has dropped the ball in terms of submitting necessary information to regulators. So far, though, neither party has backed out of the merger agreement and the deal is still on track to create the largest health insurer in America in terms of members. Andreas Halvorsen’s Viking Global led the smart money in holdings in Anthem Inc (NYSE:ANTM) with over 4.8 million shares at the end of March. Larry Robbins’ Glenview Capital was a top shareholder of both Anthem and CIGNA Corporation (NYSE:CI).
On the next page, we examine CF Industries Holdings, and Valeant Pharmaceuticals.