A few months into Donald Trump’s presidency, the bull market is alive and well. Expectations that the government will lower corporate taxes and allow companies to repatriate overseas profits have fueled optimism in the main indexes. In addition, expectations that the government will loosen regulations have ignited a spark in the financial sector.
While the main indexes have rallied, shares of some companies have been left behind for various reasons. In this article, we take a closer look at five companies whose shares are trading for under $10 and who are widely owned by elite funds, Southwestern Energy Company (NYSE:SWN), Xerox Corp (NYSE:XRX), Dynegy Inc. (NYSE:DYN), Rite Aid Corporation (NYSE:RAD), and Chesapeake Energy Corporation (NYSE:CHK).
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#5 Chesapeake Energy Corporation (NYSE:CHK)
– Number of Hedge Fund Holders (as of December 31): 41
– Total Value of Hedge Fund Holdings (as of December 31): $884.01 million
– Hedge Fund Holdings as Percent of Float (as of December 31): 14.20%
After rallying from last summer on the back of the natural gas/crude rally, Chesapeake Energy Corporation (NYSE:CHK) has given back much of its gains. Natural gas sentiment is soft, and there is a fear among some investors that U.S. shale is too competitive at $50 per barrel and higher. Whether OPEC will continue to countenance U.S. shale production gains (2018 might be a record production year), or whether the cartel extends its cuts for another six months is a big question. The price action of Chesapeake likely depends on that decision in the near to medium terms. 41 top funds had a bullish position in Chesapeake Energy Corporation (NYSE:CHK) as of the most recent 13-F reporting period, unchanged from that of the previous quarter.
#4 Rite Aid Corporation (NYSE:RAD)
– Number of Hedge Fund Holders (as of December 31): 42
– Total Value of Hedge Fund Holdings (as of December 31): $1.44 billion
– Hedge Fund Holdings as Percent of Float (as of December 31): 16.60%
Rite Aid Corporation (NYSE:RAD) recently pierced the $5 per share mark to trade close to $4 and three quarters. At the moment, there is still considerable uncertainty surrounding DOJ approval for the merger with Walgreens Boots Alliance Inc (NASDAQ:WBA), which amended the previous merger agreement earlier this year to a tiered reward system. Although 42 elite funds owned the stock at the end of December, the doubters don’t know if the combination can divest enough assets to please both the government and to make sense financially. Walgreens is purportedly considering selling some Rite Aid assets to Fred’s as a potential appeasement plan.
On the next page, we examine Dynegy Inc, Xerox, and Southwestern Energy.