Despite the fact that the polls are narrowing and November 8 is just over a week away, the markets are rather calm, as all three indexes are moderately in the green.
Among the stocks that are capturing investors’ attention today are Nordstrom, Inc. (NYSE:JWN), AbbVie Inc (NYSE:ABBV), AutoNation, Inc. (NYSE:AN), Deere & Company (NYSE:DE), and Davita Inc (NYSE:DVA). Let’s examine the various reasons causing the five stocks to trend and analyze how hedge funds have been trading the five stocks using the latest 13F data.
Our research determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details).
Nordstrom, Inc. (NYSE:JWN) is 0.8% in the red after Paul Trussell of Deutsche Bank downgraded the stock to ‘Hold’ from ‘Buy’ and trimmed his price target on it to $56 from $57, citing the luxury retailer’s rather full valuation. Shares of Nordstrom have rallied by over 45% since late-June, and the stock doesn’t look cheap without more sales growth. John W. Rogers‘ Ariel Investments owned 1.24 million shares of Nordstrom, Inc. (NYSE:JWN) on June 30, up by 9% from its stake on March 31.
AbbVie Inc (NYSE:ABBV) shares are down by 2% after Vamil Divan of Credit Suisse downgraded the stock to ‘Neutral’ from ‘Outperform’ and trimmed his price target to $60 per share from the previous mark of $70. Divan sees limited upside pipeline catalysts in the near-term and is rather concerned about Humira’s success given the increased attention to pricing transparency and the tougher payer environment. Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 57 owned $4.77 billion in AbbVie Inc (NYSE:ABBV) positions on June 30, down from 65 funds holding $5.28 billion in positions on March 31.
On the next page we’ll take a closer look at the latest on AutoNation, Deere & Company, and Davita.
AutoNation, Inc. (NYSE:AN) shares are in the red after John Murphy of Bank of America downgraded the stock to ‘Neutral’ from ‘Buy’. Murphy also cut his price target on the stock to $45 from $66 on the belief that the company’s business transformation initiative might be risky given the potential for management distraction and excessive costs. The initiative also takes money away from stock buybacks and accretive acquisitions. The number of funds that we track with holdings in AutoNation, Inc. (NYSE:AN) fell by four quarter-over-quarter to 28 at the end of June.
Deere & Company (NYSE:DE) has inched up by 1.5% after Baird gave the stock a thumbs up, upgrading the stock to ‘Outperform’ from ‘Neutral’ and raising its price target to $100 from $86. From his research, analyst Mircea Dobre thinks that demand for large agriculture products will bounce back and that the company could potentially realize significant cost savings down the road. 33 funds in our system were long Deere & Company (NYSE:DE) at the end of June, up by three funds from the end of March.
Last but not least, Davita Inc (NYSE:DVA) shares are almost 5% higher after the company announced a change for medicaid patients seeking affordable care act plan coverage. According to the press release, Davita will suspend support for applications to the American Kidney Fund for charitable premium assistance by patients enrolled in the minimum needed Medicaid coverage who are seeking additional coverage on a 2017 Affordable Care Act plan. The change will affect roughly 1% of the company’s total patient population who meet the criteria, or around 2,000 people. Davita estimates the new policy will result in a reduction in annualized operating income of up to $140 million before offsets and could potentially result in a $230 million reduction in the worst case scenario. The stock is higher due to the fact that some in the market view the news as a ‘de-risking’ even, as the market expected worse numbers. Warren Buffett‘s Berkshire Hathaway was long 38.57 million shares of Davita Inc (NYSE:DVA) on June 30.