With this month’s two major catalysts now over, the markets are relatively quiet, as all three major indexes are slightly in the green at the start of this morning’s trading.
In this article, we’ll find out why investors are buzzing about two big Warren Buffett favorites, along with three other companies. Those stocks are Wells Fargo & Co (NYSE:WFC), Select Comfort Corp. (NASDAQ:SCSS), Array Biopharma Inc (NASDAQ:ARRY), American Express Company (NYSE:AXP), and Sonic Corporation (NASDAQ:SONC). We’ll also use the latest 13F filings to determine 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).
In perhaps the first high profile case of clawbacks, Wells Fargo & Co (NYSE:WFC)‘s Board has agreed to claw back compensation from both current CEO John Stumpf and former head of retail Carrie Tolstedt. Stumpf will forfeit unvested stock awards of around $41 million and won’t make any salary while the investigation into Wells Fargo’s previous shady sales practices are ongoing. Tolstedt will forfeit unvested stock awards of around $19 million and won’t receive any bonus for 2016. Bulls hope the clawbacks can put the public furor over the scandal to rest and that Wells Fargo can go back to becoming a boring, high-quality dividend stock again. Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 88 of them had a long position in Wells Fargo & Co (NYSE:WFC), down by two funds from the previous reporting period.
Select Comfort Corp. (NASDAQ:SCSS) shares are 7.56% in the red due to its peer, Tempur Sealy International Inc (NYSE:TPX), plunging after it issued soft 2016 guidance. For the year, Tempur Sealy expects net sales to be down by 1%-to-3% compared to 2015 and for adjusted EBITDA to be between $500 million and $525 million, well below the market’s estimates. Given that many of the same factors affect both companies, some traders are evidently taking a cautious stance with regards to Select Comfort Corp as well. 12 funds that we track were bullish on Select Comfort Corp. (NASDAQ:SCSS) at the end of June.
On the next page, we’ll examine the latest on Array Biopharma, American Express, and Sonic Corporation.