On the first day of the new trading week, all three index futures are modestly higher, while oil and gas futures are still trending lower. Among the stocks in focus today are Tesla Motors Inc (NASDAQ:TSLA), ArcelorMittal SA (ADR) (NYSE:MT), Apollo Education Group Inc (NASDAQ:APOL), and Wells Fargo & Co (NYSE:WFC), as each is trending for a different reason. Let’s find out what those reasons are. Moreover, we will also examine relevant hedge fund sentiment toward the equities.
Why do we pay attention to hedge fund sentiment? Most investors ignore hedge funds’ moves because as a group their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the market in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research have shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period (see the details here).
Tesla Motors Inc (NASDAQ:TSLA) continues to show why it is one of the leading innovators in automotive technology, as the company recently pushed through a software update that gives Model S and Model X owners more autonomous control. In the new autonomous self driving mode, Tesla cars can drive themselves up to 39 feet at one mile per hour and park themselves in a garage or street spot, or go to their owners. The self-park/summon feature is only the first step, as CEO Elon Musk believes Tesla cars will be able to drive themselves cross-country in two years (assuming that U.S laws allow it by then).
Hedge fund sentiment around Tesla Motors Inc (NASDAQ:TSLA) has been stable, with the number of elite funds long the stock unchanged at 26 as of the latest 13F reporting period.
ArcelorMittal SA (ADR) (NYSE:MT) gapped up by over 7% in morning trading as investors have become more optimistic about the company’s future. Although steel demand from the energy sector is weak because of low crude and gas prices, investors hope the strong U.S economy and the recently imposed anti-dumping duties can save some of the industry leaders in time for a rebound.
Elite funds have been cutting their losses in ArcelorMittal SA (ADR) (NYSE:MT) however, as the number of elite funds long the stock dropped by four to 18 by the end of September. Those 18 funds held around 2.7% of ArcelorMittal’s float.
On the next page, we examine Apollo Education Group Inc, and Wells Fargo & Co.