With the end of the quarter rapidly approaching, it seems that a short squeeze/bear market rally could be on deck as bargain hunters snap up stocks and momentum players take a breather. All three index futures are in the green, as is crude oil. Although no one knows how long the rally will last, the bulls certainly hope that the market can forget about the Brexit and focus on other things instead.
Among the stocks in the spotlight today are Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT), Royal Bank of Scotland Group PLC (NYSE:RBS), Lloyds Banking Group PLC (ADR) (NYSE:LYG), Endo International plc – Ordinary Shares (NASDAQ:ENDP), and Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). Let’s analyze why each stock is in the spotlight and see what elite funds think of 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).
Starwood Enters Cuba
Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT) is in the spotlight today after becoming the first major American hotel company to operate in Cuba since the country’s revolution in 1959. The hotel operator has agreed to manage the iconic Gaviota 5th Avenue Hotel as well as the Gran Caribe Inglaterra hotel, two properties that could bring the company more cash flow. Bullish shareholders hope that Cuba will help the company’s bottom line grow. Shares of Starwood are up just 1.6% year-to-date. Of the 766 elite funds we track, 59 funds owned $4.49 billion worth of Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT), which accounted for 31.90% of the float on March 31, versus 52 funds and $3.25 billion, respectively, a quarter earlier.
Brexit Causes British Government to Rethink Selling Bank Shares
Royal Bank of Scotland Group PLC (NYSE:RBS) and Lloyds Banking Group PLC (ADR) (NYSE:LYG) shareholders received some good news after the British government decided to put on hold plans to sell its stake in the two banks this year. The government had planned to raise as much as 9 billion pounds by pruning its stake in the two banks. Due to the ‘Brexit’ vote on June 23, however, shares of both banks have fallen sharply and it would not be in the government’s best interest to add fuel to the fire by selling now. The British government currently owns 9% of Lloyds and 73% of Royal Bank of Scotland. A total of 10 funds from our database had a bullish position in Royal Bank of Scotland Group PLC (NYSE:RBS) and seven funds were long Lloyds Banking Group PLC (ADR) (NYSE:LYG) at the end of March.
On the next page, we examine Endo International, and Teva Pharmaceutical Industries.