Investors are watching WTI and Brent today after Thursday’s heartening EIA report that showed crude inventory in the U.S. falling by 14.5 million barrels, the most since 1999.
Given the spotlight on crude, it’s not surprising that several energy companies are trending. Without further ado, let’s take a look at five stocks on trader’s tongues today, which are Apple Inc. (NASDAQ:AAPL), Wells Fargo & Co (NYSE:WFC), Vince Holding Corp (NYSE:VNCE), Williams Companies Inc (NYSE:WMB), and Enterprise Products Partners L.P. (NYSE:EPD). Let’s also examine hedge fund activity in those five stocks using the latest 13F filing data.
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).
Apple Confident of Demand
Apple Inc. (NASDAQ:AAPL) is in the spotlight today after the tech company said that it won’t provide pre-order sales volume and first weekend sales data like it has before. Because the company believes the figures are “governed by supply, not demand” initially, Apple thinks the data is not relevant and isn’t representative of overall consumer demand for the iPhone 7 and 7 Plus. Apple’s sudden reluctance to share that data is due to the company facing supply issues, which had been previously rumored, which could lead to first-weekend sales figures that would be deemed a disappointment. Thus, it appears that Apple would rather stay mum than let the market have a knee-jerk reaction, which would likely happen despite any supply chain caveat. Apple’s management has reiterated its financial guidance for the September quarter, however, of $45.5 billion-to-$47.5 billion in sales and between 37.5% and 38% in gross margin. David Einhorn‘s Greenlight Capital trimmed its position in Apple Inc. (NASDAQ:AAPL) by 17% from March 31 to June 30, to 6.85 million shares.
Wells Fargo Settles a Regulatory Case
Wells Fargo & Co (NYSE:WFC) is trending after the bank settled a government regulatory case that alleged the company of countenancing “widespread illegal practices,” including allowing employees to open over 2 million credit and deposit accounts to hit sales targets. Wells Fargo does not admit to or deny the accusations, and will pay a total fine of $185 million to make them go away. Wells Fargo has fired around 5,300 employees for the inexcusable conduct. Warren Buffett‘s Berkshire Hathaway owned almost 480 million shares of Wells Fargo & Co (NYSE:WFC) at the end of June.
On the next page we’ll examine the latest on Vince Holding Corp, Williams Companies, and Enterprise Products Partners.
Mixed Results at Vince
Vince Holding Corp (NYSE:VNCE) reported mixed results for its second quarter of fiscal year 2016 ended July 30, posting a loss of $0.04 per share, $0.02 better than estimates, and revenue of $60.7 million, $3.45 million worse than the consensus target. Sales fell by 24.1% year-over-year, as the company’s wholesale segment sales retreated by 32.1% due to the planned reduction in full-price orders related to the transition of product under the new design team. For fiscal 2016, Vince’s management expects flat-to-$0.06 in diluted EPS on revenue of $290 million-to-$305 million. Of the 749 hedge funds that we track which filed 13F’s for the June quarter, the number with positions in Vince Holding Corp (NYSE:VNCE) fell by one quarter-over-quarter to 14 at the end of June.
Potential Pipeline Merger Nixed
Although the pipeline sector has experienced some major M&A recently, Williams Companies Inc (NYSE:WMB) just can’t seem to find a partner. Shortly after being dumped by Energy Transfer Equity LP (NYSE:ETE), Williams’ rumored merger with Enterprise Products Partners L.P. (NYSE:EPD) looks increasingly unlikely after the latter released a press statement saying that it is no longer interested in the company. According to the statement, Enterprise Products Partners is no longer interested due to “recent news leaks, movements in the price of the partnership’s common units as well as questions from investors.” The company further added that:
“As a result of rumors with respect to our proposals, as well as the lack of engagement by Williams, we have determined that there is no actionable path forward toward an agreement. We, therefore, have withdrawn our non-binding proposals.”
If crude oil and natural gas prices rebound, Williams Companies won’t need any mergers to do well. 28 funds that we track were long Enterprise Products Partners L.P. (NYSE:EPD) on June 30, while 58 had bullish positions in Williams Companies Inc (NYSE:WMB).