Crude futures are in the red to start off the week as OPEC continues to squabble on who is going to cut what, making the prospect of a deal seem less likely. Meanwhile, the broader index futures are in the green on the back of yet more M&A news.
In this article, let’s take a closer look at the events causing Apple Inc. (NASDAQ:AAPL), Goldman Sachs Group Inc (NYSE:GS), Alphabet Inc (NASDAQ:GOOG), Baker Hughes Incorporated (NYSE:BHI), and General Electric Company (NYSE:GE) to trend and let’s also examine relevant hedge fund sentiment toward the five stocks.
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It’s official. General Electric Company (NYSE:GE) has agreed to fold its oil and gas unit into Baker Hughes Incorporated (NYSE:BHI) to form a larger, more efficient oil service giant. According to the deal’s terms, Baker Hughes shareholders will get a special one-time dividend of $17.50 in cash per share after the deal closes, and will retain 37.5% ownership of the new combination. GE will retain the rest. Due to the synergies involved, both stocks are in the green today, with Baker Hughes up by 4% and GE rising by around 1%.
44 funds that we track were long Baker Hughes Incorporated (NYSE:BHI) at the end of the second quarter, while 57 were long General Electric Company (NYSE:GE).
Alphabet Inc (NASDAQ:GOOG) is in the spotlight today after Bloomberg reported that the internet giant has assigned Jonathan Rosenberg as a counselor to its Access segment, which is responsible for Google Fiber. Rosenberg is widely regarded as a ‘fixer’ who straightens out troubles in a division. Due to the move, some traders think Rosenberg will push for more fiscal efficiency in the segment, which would ultimately mean higher margins, but possibly lower top-line growth, for Google Fiber. The number of funds in our system with holdings in Alphabet Inc (NASDAQ:GOOG)’s Class C shares fell by 16 quarter-over-quarter to 126 at the end of June, while 135 funds were shareholders of its Class A shares, down by 20 quarter-over-quarter.
On the next page we’ll examine why investors are buzzing about Apple and Goldman Sachs this morning.
According to the New York Post, Goldman Sachs Group Inc (NYSE:GS) is said to be pressuring Apple Inc. (NASDAQ:AAPL) to bid for Time Warner Inc (NYSE:TWX). Although AT&T Inc. (NYSE:T) previously agreed to buy Time Warner, many traders don’t think the deal is guaranteed to go through due to regulatory approval hurdles. Some analysts estimate the probability of approval as being just 50%. Given that Apple has the cash to outbid AT&T and seeing as there may be less regulatory hurdles, Apple could be in a better position to unlock value if it were to successfully bid for the company. Apple certainly could use Time Warner’s content for its internet TV initiatives.
“We are open to acquisitions of any size that are of strategic value, where we can deliver better products to our customers and innovate more. And so we look at a whole variety of companies, and based on that, we choose whether to move forward or not. But we’re definitely open, and we definitely look,” Apple CEO Tim Cook also said during the company’s earnings call.
By goading Apple to bid, Goldman Sachs would be in prime position to make some fees off the potential deal. Goldman Sachs is not currently involved in an advisory capacity on the AT&T/Time Warner Inc. deal.
According to our database of 749 funds which filed 13Fs for the June reporting period, 116 were long $10.68 billion worth of Apple Inc. (NASDAQ:AAPL) shares on June 30, which accounted for 2.00% of the float, while 68 funds were long $4.45 billion in Goldman Sachs Group Inc (NYSE:GS) shares, which amounted to 7.20% of that stock’s float.