Crude futures are 1.5% in the red today as the traders factor in future Federal Reserve interest rate hikes into the commodity’s price. The three main indexes, meanwhile, are modestly higher as investors remain optimistic about the U.S. economy.
In this article, we find out why five stocks, T-Mobile US Inc (NASDAQ:TMUS), Square Inc (NYSE:SQ), KeyCorp (NYSE:KEY), Statoil ASA (ADR) (NYSE:STO), and General Electric Company (NYSE:GE), are trending today. Moreover, we are going to assess the hedge fund sentiment towards these stocks based on the data from the latest 13F filings.
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).
T-Mobile Gets the Thumbs Up
Analysts at Wells Fargo Securities upgraded uncarrier T-Mobile US Inc (NASDAQ:TMUS) to ‘Outperform’ from ‘Market Perform’, citing T-Mobile’s substantial rise in anticipated free cash flow in late 2016 and 2017. The analysts have a $54 price target, giving the telecom an additional 17% upside from current levels. Due to its give-the-consumers-more strategy, T-Mobile US Inc (NASDAQ:TMUS) has rapidly grown its subscriber base and stock price. Shares are up 17% year-to-date. Among the investors in our database holding shares of T-Mobile was Andreas Halvorsen‘s Viking Global, which more than quadrupled its position to almost 14 million shares during the second quarter.
Analyst: Square Upside Limited
BTIG analysts don’t see much upside left in Jack Dorsey’s other company, Square Inc (NYSE:SQ). After its near 40% surge since late June, BTIG analysts downgraded Square to ‘Neutral’ from ‘Buy’ and said that the stock is more ‘fairly valued’ at current levels. Smart money activity in Square Inc (NYSE:SQ) has been relatively stable, as 16 funds tracked by us owned shares of Square Inc (NYSE:SQ) at the end of the second quarter, compared to 14 funds a quarter earlier.
On the next page, we find out why traders are talking about KeyCorp, Statoil ASA (ADR), and General Electric Company.
Analyst Downgrade At KeyCorp
KeyCorp (NYSE:KEY) is in the spotlight today after Piper Jaffray lowered their rating on the stock to ‘Neutral’ from ‘Overweight’ due to concerns that KeyCorp might not meet Wall Street’s earnings expectations for fiscal years 2017 and 2018. KeyCorp recently closed on the acquisition of First Niagara in a move that might keep management busy for a while. According to our data, hedge funds were pretty bullish on KeyCorp (NYSE:KEY) in the second quarter. The number of funds from our database with holdings in KeyCorp (NYSE:KEY) rose by six quarter-over-quarter to 46 at the end of June.
Statoil Adjusts to Lower Brent in the North Sea
Statoil ASA (ADR) (NYSE:STO) is in the spotlight today after The Wall Street Journal reported that the oil company plans to cut development spending in the North Sea Johan Sverdrup field by 20% to around $12 billion. By cutting costs, the development will be profitable even if Brent prices should fall to around half of current prices. An efficient cost cutting will be increasingly important for Statoil ASA (ADR) (NYSE:STO) if oil prices remain lower for longer. Heading into the third quarter, 10 funds had a bullish position in Statoil ASA(ADR) (NYSE:STO), compared to seven funds a quarter earlier.
GE to Get More Competition in Jet Engines in China
General Electric Company (NYSE:GE) is trending today after the Chinese government created Aero-Engine Group of China, an agglomeration of various existing Chinese aircraft engine companies. With a registered capital of $7.5 billion and strong support from the government, Aero-Engine Group of China will likely give GE a run for its money in terms of manufacturing engines for Chinese airplanes over the next decade. Given China’s large population, the Chinese civilian aircraft market is one of the largest markets in the world. Although it remains a great long-term holding, our data shows that the smart money has been more cautious towards General Electric Company (NYSE:GE)’s stock after its run-up. The number of investors tracked by our team with holdings in General Electric Company (NYSE:GE) slid by seven quarter-over-quarter to 57 at the end of June.