The market has rebounded after yesterday’s decline as optimism over the U.S. economy offsets the trade war news. Among the stocks trending today are The Boeing Company (NYSE:BA), Alphabet Inc (NASDAQ:GOOG), Tesla Inc. (NASDAQ:TSLA), Uber Technologies, Inc. (NYSE:UBER), and The Kroger Co. (NYSE:KR) . Let’s take a closer look and analyze how the smart money is positioned among each stock.
Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
The Boeing Company (NYSE:BA) is in the green by around 0.9% after U.S. aviation officials said that a bird strike might have led to the eventual crash of an Ethiopian Airlines Boeing 737 Max. In particular, a bird strike may have created flawed sensor data, which led to the plane’s anti-stall code to send the nose of the plane down. A fix of the 737 Max’s software is complete but many 737 Max’s aren’t in the air just yet. If Boeing can move past the 737 Max problem, its stock could potentially recover. Of the around 700-740 elite funds we track, 67 funds owned $4.05 billion of The Boeing Company (NYSE:BA) on December 31, versus 53 funds and $3.75 billion respectively on September 30.
Alphabet Inc (NASDAQ:GOOG) is on watch after its Google division reversed a decision to cut ties with global number 2 smartphone maker Huawei. The Chinese company was originally placed on a blacklist that basically prevented many American companies from doing business with it, but was given 90 days for internet broadband providers and mobile phone companies to work with it to keep existing telecom networks online. 141 elite funds had a bullish position in Alphabet Inc (NASDAQ:GOOG) at the end of December.
Tesla Inc. (NASDAQ:TSLA) is on watch after Jim Cramer of Mad Money called Morgan Stanley’s worst case scenario of Tesla at $10 per share ‘really insane’. The Morgan Stanley analyst also has a base case of $230 and best cease of $391. 47 top funds owned shares of Tesla Inc. (NASDAQ:TSLA) at the end of the fourth quarter, up 16 funds from the previous quarter.
Uber Technologies, Inc. (NYSE:UBER) is trending after Shyam Patil of Susquehanna set a $42 price target and a ‘Neutral’ rating on the stock. Although Patil says that Uber ‘is a once in a generation company with a massive opportunity to revolutionize transportation and logistics,’ the analyst is concerned about decelerating growth in recent quarters.
The Kroger Co. (NYSE:KR) is on watch by traders after Bernstein said that the market isn’t giving the grocer enough credit. Bernstein has an ‘Outperform’ rating and a $33 price target. ““With investors worried about recent comps and margins, we believe KR’s capacity to survive the short term and positioning for the long term are not getting full credit today. We believe the pieces are coming together to execute the rest of Restock Kroger and to take their position (with relevant partners) as a serious omnichannel player.” 33 elite funds were long The Kroger Co. (NYSE:KR) at the end of the fourth quarter, up 3 funds from the previous quarter.