European stock markets fall on weak commodity prices, and major US indices have also inched down so far in the intraday trading as oil is hitting a new low. Nevertheless, shares of Corning Incorporated (NYSE:GLW), CSX Corporation (NYSE:CSX), Whole Foods Market, Inc.(NASDAQ:WFM) and Turtle Beach Corp(NASDAQ:HEAR) are going the opposite way and are trading higher. So let’s find out why investors are bullish on these four stocks today and how the smart money investors have been trading these stocks of late.
At Insider Monkey, we track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 53 percentage points (102% return vs. S&P 500’s 47% gain) over the last 37 months (see the details here).
Corning Incorporated (NYSE:GLW)’s shares are up by nearly 3% after Dow Chemical Co (NYSE:DOW) has announced that it will buy the remaining 50% of the joint venture formed by both companies. This move will have several positive aspects and synergies, which should bring about $1 billion or more in annual EBITDA to the new and exclusive owner. Further, after a year of the termination of the agreement, it is expected that the deal increases operating EPS, cash flow from operations and free cash flow. This good news comes after the announcement of the merger between Dow Chemical and E I Du Pont De Nemours And Co (NYSE:DD). A total of 38 funds from our database held $957.9 million worth of Corning’s stock at the end of September, amassing around 4.60% of the company. John A. Levin‘s Levin Capital Strategies holds the largest stake in Corning, which contains 11.41 million shares.
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CSX Corporation (NYSE:CSX)’s stock has advanced by 1.7%, recovering from a downward trend in the past days, during which the stock lost 7%. The company has recently announced that it will transfer its listing to NASDAQ from NYSE. The number of hedge funds long the stock decreased to 47 from 48 during the third quarter. Together, they hold some 5.3% of the company’s common stock as of September 30. Ken Griffin ‘s Citadel Investment Group is the largest shareholder of CSX Corporation, among the funds we track, having raised its position by 9% during the third quarter to 8.82 million shares, valued at $237.4 million.