Why Are These Five Stocks Registering Gains Today?

The markets continue to trade lower on Friday, but shares of Freeport-McMoRan Inc (NYSE:FCX), Sunedison Inc (NYSE:SUNE), Micron Technology, Inc. (NASDAQ:MU), Alcoa Inc (NYSE:AA), and Barrick Gold Corporation (USA) (NYSE:ABX) are among the gainers in midday trading. In this article, let’s take a look at why investors are selling these stocks. We are also going to assess the hedge fund sentiment towards these stocks.

We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see more details here). That’s why we believe it is important to pay attention to the hedge fund sentiment; we also don’t like paying huge fees.

The first on the list is Freeport-McMoRan Inc (NYSE:FCX), whose shares are up by almost 5% even though yesterday oil prices touched lows since 2009. Moreover, the company has recently taken two difficult decisions. First, it has suspended its dividends while it has cut its investment plans. Amid those decisions, the stock continues to rise. Our data show that the smart money is optimistic about the company, with the number of funds long Freeport-McMoRan Inc (NYSE:FCX) having increased by four to 44 during the third quarter. Together they hold some 13.8% of the company’s common stock, while Carl Icahn‘s Icahn Capital is the largest shareholder, owning 100 million shares valued at $969.0 million as of the end of September.

 

Sunedison Inc (NYSE:SUNE) is 4% in the green in midday trading and thus keeps advancing after the Congress has reached an agreement to extend tax credits for several years. In addition, today the analysts at FBR & Co. initiated coverage with an ‘Outperform’ recommendation and a price target of $10.5.

Among the funds we track, Sunedison Inc (NYSE:SUNE) lost popularity during the third quarter, with a total of 73 funds reporting long positions in the company, versus 93 funds the previous quarter. However, these funds amassed 46.8% of the company’s outstanding stock heading into the fourth quarter. David Einhorn‘s Greenlight Capital reported owning 18.61 million shares of Sunedison in its latest 13F filing.

Next on our list is Micron Technology, Inc. (NASDAQ:MU), which is trading 2% higher. Yesterday, the analysts at Morgan Stanley upgraded the company to ‘Overweight’ from ‘Equal Weight’ and raised their price target to $18 from $16. Morgan Stanley’s upgrade comes along with the Barclays’ reiterated ‘Buy’ rating. Nevertheless, the company’s shares have fallen by 58% on a year-to-date basis and next week will be crucial since the firm will post its quarterly results.

Within our database, hedge funds were not optimistic about Micron Technology, Inc. (NASDAQ:MU), with the number of hedge funds long the stock dropping by eight quarter-over-quarter to 71 as of September 30. Sander Gerber‘s Hudson Bay Capital Management owned 37.17 million shares at the end of September.

Next up is Alcoa  Inc (NYSE:AA), whose stock has rallied by 2% after the company announced it has signed contracts to provide supplies (titanium, steel, aluminum) to Boeing Co (NYSE:BA) worth more than $2.5 billion.

Hedge funds have been optimistic on the stock, with 46 funds owning shares in the third quarter, up from the 45 funds three months earlier. Seth Klarman‘s Baupost Group is the largest shareholder of Alcoa among the investors we follow, owning a stake of 52.27 million shares.

With the dollar falling and the price of gold up by 1.7% today, shares of Barrick Gold Corporation (USA) (NYSE:ABX) are getting stronger. While the company is working to achieve a debt reduction, yesterday it announced the sale of non-core assets.

Among the funds we track, 40 funds were long Barrick Gold Corporation (USA) (NYSE:ABX) at the end of the third quarter, down from 42 funds three months earlier. First Eagle Investment Management was the largest holder of Barrick Gold Corporation (USA) (NYSE:ABX)’s stock at the end of the quarter and reported 27.85 million shares valued at $177.1 million in its latest 13F filing.

Disclosure: none.