Crude futures are once again in the red this morning, as traders remain in risk-off mode despite this weekend’s botched coup attempt in Turkey. Among the stocks buzzing to kick off the new trading week are Royal Dutch Shell plc (ADR) (NYSE:RDS.A), Madison Square Garden Co (NYSE:MSG), Ferro Corporation (NYSE:FOE), Ocean Power Technologies Inc (NASDAQ:OPTT), and Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY). Let’s find out why each stock is in the spotlight and examine how elite funds are playing each of them.
At Insider Monkey, we track around 765 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).
Barron’s Likes Royal Dutch Shell
Financial magazine Barron’s published a bullish article on Royal Dutch Shell plc (ADR) (NYSE:RDS.A) on Saturday, stating that Shell is the best “big oil stock for investors” and that the company’s initiatives could send shares up by 20% or more even if oil prices stay flat. In the article, Barron’s writer Jack Hough notes that Shell’s cost cuts and divestments have increased confidence in Shell’s juicy 6.6% dividend yield. Mr. Hough also notes that Shell management has increased its capital discipline and that the stock trades for a low enough valuation to justify the risk of weak oil prices. It remains to be seen whether Shell will benefit from the Barron’s bounce, however, as shares of the energy giant are in the red in the pre-market. Ken Fisher‘s Fisher Asset Management was one of the shareholders of Royal Dutch Shell plc (ADR) (NYSE:RDS.A) at the end of June, owning 119,090 shares.
Bullish Write-up for Madison Square Garden
Madison Square Garden Co (NYSE:MSG) is in the spotlight today after Barron’s published a column entitled ‘MSG: Trophy Properties for 35% Off’. In the column, writer Andrew Bary notes that the holding company/conglomerate looks sharply undervalued given its approximately $60 in cash per share, no debt, and ownership of the New York Rangers, New York Knicks and various real estate. Mr. Bary also notes that Madison Square Garden is expected to have free cash flow of around $100 million for the current fiscal year ending June 30, 2017 and that the company has a $525 million share buyback program, of which only $78 million has been used. If the Dolan family chooses to unlock the latent value in Madison Square Garden someday, investors will benefit greatly. Of the 766 elite funds that we track, 31 funds owned $779.36 million worth of Madison Square Garden Co (NYSE:MSG) shares on March 31, which accounted for 19% of the float. Shares are up by 2.6% in pre-market trading.
On the next page we examine what’s happening with Ferro Corporation, Ocean Power Technologies, Nintendo, and those companies’ shares.