With the VIX rising by 20% to 24.70 in afternoon trading and crude prices fluctuating wildly, fears that 2016 could be a down year are rising. George Soros has said earlier today that there could be a global crisis that mirrors that of 2008, and that China’s structural adjustment will be more painful for the world than what many previously thought. With that being the case, shares of Wal-Mart Stores, Inc. (NYSE:WMT), Abercrombie & Fitch Co. (NYSE:ANF), Media General Inc (NYSE:MEG), Biocept Inc (NASDAQ:BIOC), and EXCO Resources Inc (NYSE:XCO) are each in the green today as investors brush off the macro worries and turn bullish. Let’s take a closer look and see why these stocks are trading higher today.
Given that Insider Monkey has done a lot of research into what the smart money likes and doesn’t like, let’s also analyze relevant hedge fund sentiment toward these stocks. Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by 52 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. a 48.6% gain for the S&P 500 Index (see the details here).
Investors are seeking refuge in Wal-Mart Stores, Inc. (NYSE:WMT) amid the broader macro worries, as shares of the retailer are up 2.3% in afternoon trading. Because demand for affordable products rise during troubled times, Wal-Mart Stores, Inc. (NYSE:WMT) was one of the best performing stocks in 2008 and will likely do well if another crisis occurs in 2016. Among the 61 elite funds that owned shares of America’s largest retailer is Warren Buffett’s Berkshire Hathaway, with a stake of 56.19 million shares at the end of September.
Abercrombie & Fitch Co. (NYSE:ANF) is almost 2% higher after analysts at Wolfe Research upgraded the stock to ‘Outperform’ from ‘Peer Perform’. Abercrombie & Fitch Co. (NYSE:ANF) benefits from the decline in crude prices as consumers tend to make more discretionary purchases if gas prices are lower. The hedge fund sentiment around the stock has been more optimistic, as 22 funds among those we track reported stakes worth $168.35 million (representing 11.50% of the float) at the end of September, versus 19 funds and $137.96 million at the end of June.
On the next page, we examine Media General, Biocept, and EXCO Resources.