On the first day of the September FOMC meeting, the bulls are firmly in charge of the market once again, as all three major indexes are up by around half-a-percentage point. After falling lower in the morning, crude futures are also attempting to make a comeback.
In this article, we’ll find out why investors are buzzing about Sinclair Broadcast Group Inc (NASDAQ:SBGI), GoPro Inc (NASDAQ:GPRO), Allergan plc Ordinary Shares (NYSE:AGN), Tobira Therapeutics Inc (NASDAQ:TBRA), and Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) this morning and use the latest regulatory data to determine how successful hedge funds are positioned in each stock.
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).
Sinclair Broadcast Group Inc (NASDAQ:SBGI) shares are 6% in the red after the company issued a disappointing update on its third quarter results. For the time period, the company expects media revenue to be between $637 million and $638 million, including $46 million of political spending. The company originally had anticipated media revenue of $649.2 million-to-$663.2 million for the quarter, with political spending accounting for $58 million-to-$68 million of that. Sinclair will release its final third quarter results on November 2. Some of the shortfall is likely due to Donald Trump’s more unconventional, social media-based style of running for President. Ken Griffin‘s Citadel Investment Group raised its position in Sinclair Broadcast Group Inc (NASDAQ:SBGI) by 45% in the second quarter to over 1.66 million shares at the end of June.
Traders are talking about GoPro Inc (NASDAQ:GPRO) after the biggest name on the street, Goldman Sachs, slightly raised its price target on the stock while retaining its ‘Neutral’ rating. Due to some stronger data from its research, the investment bank now has a price target of $14 on the action camera/drone maker’s stock, up from $12.50. In terms of its newly-launched drones, Goldman Sachs expects GoPro’s new product segment to bring in around $31 million during its fiscal year 2016 and $277 million in its 2017 fiscal year. Despite the price hike, Goldman Sachs is among the less optimistic investment banks covering GoPro, as the firm’s price target of $14 is still below GoPro shares’ current price of $15.28. Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 16 of them owned 8.40% of GoPro’s float on June 30.
On the next page, we’ll examine the latest on Allergan, Tobira Therapeutics, and Petroleo Brasileiro SA Petrobras.
Tobira Therapeutics Inc (NASDAQ:TBRA) bulls are extremely happy today to say the least, as shares have gained a monolithic 736% after Allergan plc Ordinary Shares (NYSE:AGN) agreed to buy the company for an upfront cash payment of $28.35 per share, and up to $49.84 per share in Contingent Value Rights that could be unlocked based on the successful completion of certain regulatory, development, and commercial milestones. The total potential consideration of the purchase values Tobira at potentially $1.695 billion. One reason Allergan is buying Tobira is due to the company’s progress and potential in terms of R&D for non-alcoholic steatohepatitis (NASH) and other liver diseases. With the increasing occurrence of obesity, diabetes, and other metabolic diseases among the populace, Allergan’s management expects NASH to become one of the next “epidemic-level chronic diseases” over the coming years.
In terms of hedge fund ownership, 131 funds tracked by Insider Monkey were long Allergan plc Ordinary Shares (NYSE:AGN) at the end of June, while 7 had a bullish position in Tobira Therapeutics Inc (NASDAQ:TBRA).
Despite the lower crude prices, Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) is in the green this morning after its management outlined a plan to substantially cut debt over the coming years. Under the plan, Petrobras will trim its planned investment for the 2017-to-2021 time period to $74.1 billion, versus the previous $98.4 billion figure that its management had originally stated. The company also plans to sell $19.5 billion in assets in 2017 and 2018. If all goes well, Petrobas’ management hopes to get the company’s net debt-to-EBITDA ratio down to 2.5-times by 2018. 23 funds in our system were long Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) at the end of the second quarter.