It’s a profit-taking day for crude investors, as WTI futures are down by almost 3% in afternoon trading, though the major U.S. stock indexes have rebounded to being flat or only slightly down for the day after wider dips in the early morning hours.
Among the securities that have investors buzzing today are Seadrill Ltd (NYSE:SDRL), Amazon.com, Inc. (NASDAQ:AMZN), General Electric Company (NYSE:GE), Sony Corp (ADR) (NYSE:SNE), and Vale SA (ADR) (NYSE:VALE). In this article, we’ll take a closer look at why traders are talking about each stock and use the latest 13F filings to see how the smart money was trading each security during the second quarter.
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).
Seadrill Falls on Contract Termination, Lower Brent
Seadrill Ltd (NYSE:SDRL) shares have retreated by 6% today after the company disclosed that it received notice of a contract cancellation for the drillship West Pegasus effective August 16. The West Pegasus was servicing Mexican state company Pemex before the termination. Seadrill has said that it is disputing the grounds for the termination and reviewing its legal options. Seadrill Ltd (NYSE:SDRL) was in 17 hedge fund’s portfolios at the end of June among those in our database, down by five from the end of March. Insider Monkey tracks 749 hedge funds that filed 13F’s for the June 30 reporting period.
Amazon Promotion Aims to Disrupt Automobile Purchases
Everything online store Amazon.com, Inc. (NASDAQ:AMZN) is trending today after it offered Prime members in the L.A. area the option to have a Hyundai Elantra brought to their homes for a test drive. The on-demand test drive option makes it more convenient for consumers to car shop and could lead to more sales for car manufacturers. Although it isn’t as profitable as many of its tech peers, Amazon.com, Inc. (NASDAQ:AMZN) is clearly doing something right given its stock performance year-to-date. 145 funds in our system reported holding stakes in the e-commerce giant as of the end of the second quarter, making it the second-most popular stock among them.
On the next page, we’ll find out why traders are talking about General Electric, Sony, and Vale today.
Credit Analysts Wary of GE’s New Debt Plan
Analysts at Moody’s aren’t a big fan of General Electric Company (NYSE:GE)‘s plan to bring $20 billion more in debt onto its balance sheet. Although taking on more debt at a time when interest rates are low could pay off in the long run (if used correctly), the analysts believe that GE’s plan could pressure its credit metrics, which could lead to higher interest rate costs down the road. GE currently has a senior unsecured debt rating of A1 according to Moody’s. Warren Buffett‘s Berkshire Hathaway owned more than 10 million shares of General Electric Company (NYSE:GE) at the end of June.
Upgraded PlayStation 4’s On The Way
Sony Corp (ADR) (NYSE:SNE) is in the spotlight after the Wall Street Journal reported that the Japanese conglomerate will introduce two updated versions of its hit PlayStation 4 console in September. One version will be a high-end machine that will appeal to hard-core fans with enhanced graphics capabilities, while the other version will be a slimmer, more affordable version that Sony hopes will attract more casual users. Given the intense competition it faces in TV’s, cellphones, and other electronics, Sony needs its PlayStation division to be strong for its finances to do well. 14 funds in our system held the ADR’s of the Japanese company in their portfolios at the end of June, down by four funds quarter-over-quarter.
Vale in the Spotlight Due to Bloomberg Article
According to a Bloomberg article, China’s sovereign wealth fund, China Investment Corp, is currently negotiating a multi-decade, multi-billion dollar iron ore streaming deal with Vale SA (ADR) (NYSE:VALE) that could potentially result in as much as $9 billion in upfront payments. If successfully completed, the deal would help Vale deleverage and could help improve sentiment for the stock. Vale has a net debt of around $27 billion. According to our database, 24 hedge funds had a bullish position in Vale SA (ADR) (NYSE:VALE) at the end of the June quarter.