Markets are trending green in anticipation of upcoming Fed two-day policy meeting. The stocks are likely to trade in narrow range as it awaits for Fed’s decision regarding interest rates, which are largely expected to remain unchanged.
Apart from policy decisions, updates from analysts are also another strong driver for price movement among individual stocks. With this in mind, let’s take a closer look at the latest analyst action surrounding American Electric Power Company Inc. (NYSE:AEP), Arrow Electronics Inc. (NYSE:ARW), Encore Capital Group Inc (NASDAQ:ECPG), Ford Motor Company (NYSE:F), and HD Supply Holdings Inc (NASDAQ:HDS). In addition, we are going to assess the hedge fund sentiment towards these stocks.
An everyday investor doesn’t have the same resources and capabilities to analyze different publicly-traded companies as hedge funds do. This is why it is a good idea to see what stocks hedge funds like the most and try to imitate some of their bullish moves in an attempt to reap market-beating returns. At Insider Monkey, we follow the activity of several hundred of the best-performing hedge funds as part of our strategy. We analyze their 13F filings and use the data to see what stocks they are collectively bullish on. Through extensive research we have determined that the best approach to outperform the broader indices is to follow hedge funds into their top small-cap ideas. In our backtests, a portfolio of the 15 most popular small-cap stocks generated monthly alpha of 81 basis points, versus 0.7 percentage points posted by hedge funds’ top large- and mega-cap picks (see more details here).
American Electric Power Company Inc. (NYSE:AEP)’s stock was recently downgraded by Jefferies analysts to ‘Hold’ from ‘Buy’. The analysts also slashed the price target to $67 from $77 and stated that the downgrade has been carried out to account for the loss of Genco (which was sold earlier this year) earnings that are expected to occur between 2017 and 2019. Among the funds we track, 27 funds held $1.36 billion worth of American Electric Power Company’s stock in aggregate at the end of June, having amassed 4% of its outstanding stock, compared to 32 investors that held $1.2 billion worth of shares a quarter earlier.
Arrow Electronics Inc. (NYSE:ARW) was downgraded by Goldman Sachs Group on the back of weaker ISM and accumulated semi inventory. The analysts downgraded the stock to ‘Neutral’ from ‘Buy’, while the price target was slashed to $63 from $72 per share. The number of funds from our database long Arrow Electronics amounted to 23 at the end of June, while the total value of their holdings slid to $282 million from $356 million held by 26 funds a quarter earlier.
Analysts at Citigroup yesterday downgraded Encore Capital Group Inc (NASDAQ:ECPG)’s stock to ‘Neutral’ from ‘Buy’ and the price target was cut to $24 from $31. The analysts noted that the company is likely to be negatively impacted by CFPB debt collection rule-making. Among the funds we track, six funds held $70 million worth of Encore Capital Group’s stock at the end of the second quarter, having amassed 11.70% of its outstanding stock, compared to 10 investors that held $69 million worth of shares a quarter earlier.
Shares of Ford Motor Company (NYSE:F) inched down in Tuesday’s trading session following a downgrade from Buckingham Research. The analysts currently rate the stock as ‘Neutral’ with a price target of $12, compared to the previous ‘Buy’ rating and $16 target. In a note Buckingham Research analysts stated that Ford Motor Company (NYSE:F) is likely to suffer from deteriorating volume and pricing trends for truck sales in North America and that it will also face intense competition in passenger car segment. The number of funds from our hedge fund database long Ford Motor Company (NYSE:F) went down to 31 from 33 during the second quarter, but the total value of their holdings advanced to $685 million from $613 million.
HD Supply Holdings Inc (NASDAQ:HDS) was downgraded by RBC Capital Markets to “Sector Perform” from “Outperform”. Analysts also reduced their price target on the stock to $35 from $43. The company is likely to face supply chain issues in the coming months. Among the funds we track, 47 funds held $1.6 billion worth of HD Supply Holdings’ stock in aggregate at the end of June, having amassed 22.90% of its outstanding stock, compared to 48 investors that held $1.68 billion worth of shares at the end of March.