Why Wells Fargo, Sarepta, Delphi, UPS, and More Are Making Headlines

With the U.S. Presidential debate on September 26 expected to draw a massive audience, many traders are eagerly anticipating the latest polling numbers to see what economic direction the U.S. will inch towards. If Clinton wins, the U.S. will likely remain pro-free trade, while if Trump wins, America will put itself first.

In this article, we’ll take a closer look at five stocks traders are watching today, which are Magna International Inc. (USA) (NYSE:MGA), Delphi Automotive PLC (NYSE:DLPH), Wells Fargo & Co (NYSE:WFC), Sarepta Therapeutics Inc (NASDAQ:SRPT), and United Parcel Service, Inc. (NYSE:UPS). In addition, we’ll use the latest 13F data to see how successful hedge funds are positioned in each stock.

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

Magna International Inc. (USA) (NYSE:MGA) and Delphi Automotive PLC (NYSE:DLPH) are each in the spotlight after Barron’s published a bullish column on both stocks, calling the two equities “cheap ways” to play the secular rise of autonomous cars. According to the article, both companies have expertise with autonomous tech. Delphi has worked on autonomous driving for over five decades and was the first to introduce the cruise-control system. Meanwhile, writer Tiernan Ray thinks that “Magna is what one might consider a Jabil of its industry, building many of the parts inside and out, the way Jabil helps assemble Apple’s iPhone.” Both stocks also trade for relatively low valuations, with Magna sporting a forward P/E of 7.07 and Delphi trading for just over 10-times forward earnings.

In terms of hedge fund ownership, both companies have some fans among the smart money crowd. Of the 749 top funds in our database that filed 13Fs for the June quarter, 29 were long Magna International Inc. (USA) (NYSE:MGA) on June 30, while 30 were long Delphi Automotive PLC (NYSE:DLPH).

On the next page, we’ll examine the latest on Wells Fargo, Sarepta Therapeutics, and United Parcel Service.

The news just keeps getting worse for Wells Fargo & Co (NYSE:WFC) in terms of its sales tactics scandal in which former employees created as many as two million fake accounts to juice numbers. According to Reuters, two former employees have filed a class action lawsuit in the state of California seeking a minimum of $2.6 billion for workers who tried to meet the bank’s sales quotas but failed, in part due to the fact that they weren’t cheating, leading to either their demotion, resignation, or them being laid off as a result. Warren Buffett‘s Berkshire Hathaway owns around 10% of Wells Fargo & Co (NYSE:WFC)’s shares according to recent filings.

Count Barron’s as one of the Sarepta Therapeutics Inc (NASDAQ:SRPT) bulls. In a bullish article, writer Andrew Bary opines that the company’s lead drug, Exondys 51, has the potential to do $400 million in annual sales in the United States and as much as $1 billion worldwide. With biotech stocks being valued at sometimes 5-to-10-times annual revenue, the writer thinks there could be more upside ahead despite the stock’s already-massive rally. In addition, according to some analysts, Sarepta is a potential takeover target now that the FDA has granted accelerated approval for Exondys 51. There is still some risk however, as it’s possible the confirmatory trials (as required by the FDA) will not pan out. In the meantime, Exondys 51 will still be on the market. 20 funds in out system had a long position in Sarepta Therapeutics Inc (NASDAQ:SRPT) at the end of June, up by one quarter-over-quarter.

Traders are talking about United Parcel Service, Inc. (NYSE:UPS) after the delivery/logistics company tested drone deliveries that transported emergency medical supplies in a trial. Given that the U.S. government has recently opened up the skies for commercial drone activity and drones are in many ways superior to trucks in terms of transporting packages, it is important for UPS to do as much research and development as quickly as possible to retain/gain market share. 33 funds that we track owned $1.45 billion in United Parcel Service, Inc. (NYSE:UPS) positions at the end of June, which accounted for just 1.50% of the float on June 30.

Disclosure: None