It looks like Thursday will be another good day for the markets, as all three index futures and crude are in the green. Among the stocks trending this morning are Yum! Brands, Inc. (NYSE:YUM), Bank of America Corp (NYSE:BAC), CSX Corporation (NASDAQ:CSX), Monsanto Company (NYSE:MON), and Alphabet Inc (NASDAQ:GOOG). Let’s check out why these stocks have the undivided attention of investors this morning, see how the collection of top hedge funds in our database are positioned in each stock.
At Insider Monkey, we track around 765 hedge funds and 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).
Yum! Reports Earnings
Yum! Brands, Inc. (NYSE:YUM) is 3% higher in pre-market trading after turning in mixed earnings results for the second quarter. For the period, the company earned $0.75 per share on revenue of $3 billion, beating the consensus estimate by $0.01 per share in terms of the bottom-line, but missing top-line expectations by $90 million. Driving the bullishness is the fact that Yum’s core operating profit increased by 7%, helped in part by the company’s China division, which saw operating profits jump by 6%. Due to the strong demand, Yum expects core operating profit growth of 14% or higher for the full year, a step up from the previous guidance of 12%. Of the 766 active funds we track, 51 funds owned $4.71 billion in Yum! Brands, Inc. (NYSE:YUM) holdings on March 31, which accounted for 14.10% of the float.
Fed President Says Two Hikes May Be Needed This Year
Traders are watching Bank of America Corp (NYSE:BAC) today after Federal Reserve Bank of Philadelphia President Patrick Harker said that the U.S economy may need two interest rate hikes by the end of the year, instead of the suspected one. Mr. Harker doesn’t think the Brexit will do much damage to the U.S economy and that U.S inflation could hit 2% by 2017. Given the Brexit and the upcoming Presidential elections, many investors assumed the Fed would only raise rates in December, if at all this year. Two interest rate hikes will benefit Bank of America Corp (NYSE:BAC) and pad its net interest margin. 110 funds in our database owned shares of Bank of America Corp (NYSE:BAC) at the end of the first quarter, down by three funds from the end of 2015.
On the next page we’ll take a closer look at why CSX Corporation, Monsanto Company, and Alphabet Inc are trending this morning.