Why Boeing, Yahoo, Schlumberger, Halliburton, and Seadrill Are Trending

With volatility on Wall Street low, traders are looking forward to Friday’s release of the personal income and outlays report as a potential catalyst for more movement in the indexes.

In this article, we’ll analyze five stocks that traders are talking about today, which include Boeing Co (NYSE:BA), Yahoo! Inc. (NASDAQ:YHOO), Schlumberger Limited. (NYSE:SLB), Halliburton Company (NYSE:HAL), and Seadrill Ltd (NYSE:SDRL). We’ll also use the latest 13F data to see how the smart money is positioned in each stock.

At Insider Monkey, we track over 750 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).

Boeing Co (NYSE:BA) is in the spotlight after Reuters reported that the U.S. government has given the green light for Boeing to sell around $7 billion in fighter jets to Qatar and Kuwait. The sales of the jets, which are of the F-15 and F/A-18E/F Super Hornet variety, were pending for over two years due to some concerns made by Israel. Some think the government has given the green light to the sales due to the need to reassure allies of America’s commitment to its Allies in the Middle East after the Iran nuclear deal. Phill Gross and Robert Atchinson’s Adage Capital Management raised its stake in Boeing Co (NYSE:BA) by 23% in the second quarter to just over 1.1 million shares as of the end of June.

The bad news keeps on coming for Yahoo! Inc. (NASDAQ:YHOO). According to the Wall Street Journal, security firm InfoArmor says that it was criminal hackers that broke into Yahoo’s database, driven by commercial reasons, not a state-sponsored group as the internet giant has said it suspects. Yahoo recently revealed that certain information of over 500 million of its users was compromised by a data breach in 2014. Jeffrey Smith‘s Starboard Value reported owning a long position of almost 12.3 million shares in Yahoo! Inc. (NASDAQ:YHOO), good for 16.34% of the value of the fund’s public equity portfolio as of the end of June.

On the next page we’ll find out why investors are buzzing about Schlumberger, Halliburton, and Seadrill.

Energy service companies Seadrill Ltd (NYSE:SDRL), Halliburton Company (NYSE:HAL), and Schlumberger Limited. (NYSE:SLB) are each in the spotlight after OPEC snatched victory from the jaws of defeat on Wednesday and agreed for the first time in eight years to cut/limit production to 32.5 million-to-33 million barrels per day from the current mark of about 33.4 million-barrels per day. The cartel will wait until its formal November meeting to iron out the specifics of how to execute its policy. News of the production cut caught many market participants by surprise, as most investors thought that the geopolitical squabble between Iran and Saudi Arabia was too great for the organization to bridge. The rift between the two nations was the primary reason why previous gatherings between oil producers had failed. Apparently, economic conditions have become so dire in Saudi Arabia and Iran that the leaders of the two countries were willing to overlook their differences.

News of the agreement sent crude prices surging by around 5% on Wednesday and could be a long-term positive if U.S. inventories continue to decline. If long-term crude prices rise, major oil service companies like Schlumberger and Halliburton will be able to charge more for their existing services, improving their margins and profits. If prices rise to $60-to-$65 per barrel or higher, Seadrill becomes interesting as well, despite its big debt load and near/medium-term maturities.

According to our data, hedge fund sentiment in the largest oil service company was relatively stable. The number of funds in our system with holdings in Schlumberger Limited. (NYSE:SLB) fell by one during the second quarter to 55 at the end of June. Meanwhile the smart money was a big fan of former Vice President Dick Cheney’s former company, as 62 funds had a long position in Halliburton Company (NYSE:HAL) at the end of June, up by eight funds quarter-over-quarter.

Going the opposite way was sentiment towards Seadrill Ltd (NYSE:SDRL), as 17 funds reported owning shares in the offshore driller as of the end of June, down by five funds from the end of March.

Disclosure: None