Although interest rate hikes could be just around the corner given the November election and the latest data showing that the U.S. consumer-price index rose 1.5% year-over-year in September, traders don’t seem too concerned as all three major indexes are in the green today.
Among the stocks that traders are paying attention to are two energy companies, two tech companies, and one retailer. Let’s take a closer look at the reasons why investors are buzzing about each stock and find out what hedge funds think about each company in question. More specifically, we are going to discuss SM Energy Co (NYSE:SM), Oasis Petroleum Inc. (NYSE:OAS), Tile Shop Hldgs, Inc. (NASDAQ:TTS), eBay Inc (NASDAQ:EBAY), and Facebook Inc (NASDAQ:FB).
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).
It sure seems that SM Energy Co (NYSE:SM) is in M&A mode. A few months after completing one big deal, SM is at it again, this time announcing that it has entered into a definitive purchase agreement to acquire 35,700 net acres in West Texas to expand the company’s Midland Basin footprint to around 82,450 net acres. SM will pay $1.1 billion in cash and will offer 13.4 million shares of common stock to the seller, QStar LLC. To cover some costs, SM announced that it has entered into a definitive agreement to sell its Williston Basin assets outside of Divide County for $785 million to Oasis Petroleum. Dmitry Balyasny‘s Balyasny Asset Management established a new position in SM Energy Co (NYSE:SM) of 651,793 shares during the second quarter.
As mentioned previously, Oasis Petroleum Inc. (NYSE:OAS) is trending because it agreed to buy 55,000 net acres in the Williston Basin from SM for around $785 million. The properties to be acquired are expected to produce 12,400 Boe/d in the thee months ended December 31. To pay for the acquisition, Oasis has commenced an underwritten public offering of 48 million shares at $10.80 apiece and has granted underwriters a 30-day option to buy up to 7.2 million shares additionally. Moreover, Oasis has also announced third-quarter preliminary results of average daily production of 48,509 BOE, and estimated capex of between $76 million and $81 million. The company has also increased full-year stand-alone guidance of 49,300 to 50,000 Boepd. The number of funds from our database with holdings in Oasis Petroleum Inc. (NYSE:OAS) inched up by four quarter-over-quarter to 33 at the end of June.+
On the next page, we will find out why the spotlight is shining on Tile Shop Hldgs, eBay, and Facebook.