Here’s Why Noble Corporation, Electronic Arts, Twitter, and Two Other Stocks Are in Spotlight

Wall Street is in the green today after the government reported that the U.S. economy grew a sizzling 2.9% in the third quarter, or 0.4% better than analyst estimates.

In this article, we will examine why Noble Corporation Ordinary Shares (UK) (NYSE:NE), Electronic Arts Inc. (NASDAQ:EA), Twitter Inc (NYSE:TWTR), Honeywell International Inc. (NYSE:HON), and Mead Johnson Nutrition CO (NYSE:MJN) are in the spotlight today and we will assess the hedge fund sentiment towards 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).

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Noble Corporation Ordinary Shares (UK) (NYSE:NE) shares are down by 2% after the company announced the elimination of its $0.02 per share quarterly dividend, effective immediately. Due to the challenging fundamentals in the offshore drilling industry that have led to lower fleet utilization, Noble’s board of directors chose to focus on liquidity preservation rather than pay the annual dividend cost of around $20 million. Whether the dividend suspension is a good long term move depends on how soon the offshore drilling market recovers. Although many expect the sector to bottom next year, it is unclear how robust a recovery will be given the current inventory surpluses and the sub-$60 Brent prices. Of the 749 funds we track, 33 funds owned $287.35 million worth of Noble Corporation Ordinary Shares (UK) (NYSE:NE)’s stock, which accounted for 14.30% of the float on June 30, up from 29 funds and $181.02 million, respectively, on March 31.

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Electronic Arts Inc. (NASDAQ:EA) is 3.4% in the red after Cowen analyst Doug Creutz downgraded the videogame maker’s stock to ‘Market Perform’ from ‘Outperform’ and trimmed his price target to $82 per share from $96. Creutz cut his rating specifically because he estimates Titanfall 2 sales will be disappointing, as he estimates unit sales for the game to come in around 6.0 million, versus the previous estimate of 9.0 million. Although he is bearish on Titanfall 2, Creutz does not expect management’s guidance to miss due to stronger-than-anticipated Battlefield 1 sales. The number of elite funds with holdings in Electronic Arts Inc. (NASDAQ:EA) rose by two quarter-over-quarter to 58 at the end of June.

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On the next page, we examine Twitter, Honeywell International, and Mead Johnson Nutrition CO.

Twitter Inc (NYSE:TWTR) shares are 3% higher after Oppenheimer analyst Jason Helfstein upgraded the stock to ‘Perform’ from ‘Underperform’. The analyst upgraded the stock because he thinks the market is now properly valuing Twitter in light of its sharp correction. Given Twitter’s current price, Helfstein considers the market is pricing in Twitter’s tough fundamental road ahead, as well as unknowns such as innovation from competitors. A total of 30 funds tracked by us had a bullish position in Twitter Inc (NYSE:TWTR) at the end of the second quarter, up by three funds from the previous quarter.

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Honeywell International Inc. (NYSE:HON) is 1% in the green after the company’s board approved a 12% hike in the company’s annual dividend rate, to $2.66 per share. The increase will begin for the fourth quarter of 2016, when Honeywell will reward its shareholders with a quarterly dividend of $0.665 per common share. That translates to a forward yield of around 2.4%. Robert Polak‘s Anchor Bolt Capital owned 1.36 million shares of Honeywell International Inc. (NYSE:HON) on June 30, down by 2% on the quarter.

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Last but not least, Mead Johnson Nutrition CO (NYSE:MJN) is in the green after Amit Sharma of BMO Capital said that the stock’s decline after a soft earnings report was overdone. Although Mead Johnson’s U.S. business is suffering ‘transient’ weakness, Sharma likes how Mead’s China sales are improving and thinks the equity’s risk/reward ratio is compelling. Sharma has an ‘Outperform’ rating and a $92 price target. The number of funds from our database with holdings in Mead Johnson Nutrition CO (NYSE:MJN) fell by 12 quarter-over-quarter to 28 at the end of June.

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Disclosure: None