Many stocks moved higher after the closing bell yesterday as the market closed higher. Two such stocks which gained big in the after-hours session were Air Products and Chemicals, Inc. (NYSE:APD) and Cablevision Systems Corporation (NYSE:CVC), though only one of them has been able to sustain its momentum. In addition to the news that sparked this after-hours movement, we will also take a look at the hedge fund sentiment surrounding these stocks in order to assess the long-term potential of these companies.
Whether elite hedge funds collectively like a stock or not is an important metric to consider, as these large investors show a great level of skill and expertise when it comes to picking stocks. Over the last few years equity hedge funds have trailed the market by a large margin, but that’s mostly due to their hedging and short positions, which perform poorly in a bull market. Their long positions performed far better, especially their small-cap picks, which have the potential to beat the market by 95 basis points per month on average, as our backtests showed. Our small-cap strategy involves imitating a portfolio of the 15 most popular small-cap picks among hedge funds and it has returned 118% since August 2012, beating the S&P 500 ETF (SPY) by over 60 percentage points (read more details here).
Air Products and Chemicals, Inc. (NYSE:APD) jumped by more than 3% in the after-hours session following the news that the gas and chemical provider is planning to spin off its material technologies business through a tax-free spin-off to its shareholders. This separation is expected to happen within the next year. The intention behind the spin-off is to enhance the competitive positions of the industrial gases and material technologies businesses in their respective sectors. However, despite the markets generally loving spin-offs, shares of Air Products and Chemicals have been unable to maintain their momentum, and are trading up by just 0.11% in morning trading.
Hedge funds opted to pull some capital out of Air Products and Chemicals, Inc. (NYSE:APD) during the second quarter, as there were 76 hedge with a total investment worth $8.64 billion in the stock at the end of June. There were 83 hedge funds with shares worth $9.94 billion at the end of March. Considering the fact that the stock had depreciated by around 9.5% during the April – June period we can say that the hedge funds did also pull some capital out of the stock. It is also important to note that as of June, hedge funds that we track held around 29.4% of Air Products and Chemicals, Inc. (NYSE:APD)’s total outstanding shares. Among the hedge funds we track, billionaire Bill Ackman‘s Pershing Square continued to remain bullish on this stock, as the hedge fund held around 20.5 million shares valued at $2.8 billion at the end of June. On the heels of Pershing Square is Andreas Halvorsen’s Viking Global and Daniel S. Och’s OZ Management, with 5.9 million shares and 5.7 million shares respectively.