U.S stocks are enjoying a strong day today as the U.S. dollar declines to its lowest levels in eight months and commodity prices rise. Among the most notable stocks making upward moves today are Chesapeake Energy Corporation (NYSE:CHK), Vale SA (ADR) (NYSE:VALE), Can Fite Biopharma Ltd (ADR) (NYSEMKT:CANF), Cliffs Natural Resources Inc (NYSE:CLF), and Barclays PLC (ADR) (NYSE:BCS). In this article we’ll examine why these stocks are being bought today and what top investors think about them.
At Insider Monkey, we track around 785 hedge funds and other institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
Chesapeake Energy Corporation (NYSE:CHK) has gained 13% today after the company announced an amendment to its $4.0 billion secured revolving credit facility agreement maturing in 2019. Following a review by the company’s bank syndicate group, its borrowing base has been reaffirmed at $4.0 billion. The oil and gas company has postponed the redetermination of its next scheduled borrowing base until June 2017. Among the highlights of the amendment is that it provides temporary covenant relief, as the facility’s senior secured leverage ratio will be suspended until September 2017. Furthermore, Chesapeake Energy Corporation (NYSE:CHK) has agreed to enlist additional assets as collateral, with the amendment now including a collateral value coverage test which could put a cap on its borrowing capacity if the collateral coverage ratio dips below 1.25-times. The amendment comes at a time when most oil and gas producers are preparing for steep cuts in credit lines.
Out of the hedge funds tracked by Insider Monkey, 32 funds held positions in Chesapeake Energy Corporation with a total value of $716.6 million at the end of the fourth quarter. Carl Icahn’s Icahn Capital LP is one of the most notable shareholders of Chesapeake Energy, with ownership of 73 million shares of the company.
Shares of Vale SA (ADR) (NYSE:VALE) have gained more than 7% today as a congressional commission is set to decide whether or not to impeach Brazilian President Dilma Rousseff. Tensions are high in the Brazilian capital, as police ramp up security ahead of the crucial vote. Rousseff is accused of using money improperly to balance the country’s budget. Today’s vote is largely seen as symbolic, as the full lower house of Congress will vote on the impeachment this month. It’s expected that investment in Brazil and the performance of the country’s economy as a result, will improve should the President be impeached.
Out of the funds we track, 18 of them held stakes in Vale SA with a total value of $147.3 million on December 31. Howard Marks’ Oaktree Capital Management held the most notable stake, of more than 9.00 million shares of the company.
On the following page we’ll examine the gains witnessed in three other stocks today.