On the first day of the new week, all three indexes are in the green and shares of Syngenta AG (ADR) (NYSE:SYT), Comcast Corporation (NASDAQ:CMCSA), United States Steel Corporation (NYSE:X), Live Nation Entertainment, Inc. (NYSE:LYV), and SFX Entertainment Inc (NASDAQ:SFXE) are trending for various reasons. Let’s take a closer look.
In addition, let’s analyze hedge fund sentiment toward the stocks, if relevant. Why do we pay attention to hedge fund sentiment. Most investors ignore hedge funds’ moves because as a group their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the market in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research have shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period. We have been tracking the performance of these stocks in real-time since the end of August 2012. After all, things change and we need to verify that back-test results aren’t just a statistical fluke. We weren’t proven wrong. These 15 stocks managed to return 102% over the last 37 months and outperformed the S&P 500 Index by 53 percentage points (see the details here).
The chase for Syngenta AG (ADR) (NYSE:SYT) continues, as Bloomberg is reporting that China National Chemical Corp has raised its acquisition offer for the pesticide and seeds giant to 470 Swiss Francs/share from the previous 449 francs/share. That’s roughly $473 per share under current exchange rates and $94.6 per ADR. If successful, the acquisition would occur in two stages, with China National Chemical Corp acquiring 70% of Syngenta AG (ADR) (NYSE:SYT) first, and then having an option to acquire the last 30% later. Although the talks are in advanced stages, they could fall apart at any time and no agreement has been reached so far. Shares of the company are up 2.4% in morning trading.
Comcast Corporation (NASDAQ:CMCSA) shares are 1.6% in the red as investors worry about the cord cutting trend. Last week, the analysts at BTIG Research downgraded Walt Disney Co (NYSE:DIS) to ‘Sell’ from ‘Neutral’ and cut their price target to $90 from $108 despite Disney’s strong Star Wars pre-sales. The analysts worried Disney couldn’t offset subscriber losses in its ESPN division with a stand-alone product. Disney shares fell more than 3% as a result and are down another 1% today. If Disney shares are worth less, Comcast Corporation (NASDAQ:CMCSA) is also worth less based on relative valuation. In addition, shares could also be down because of rumors that Comcast is considering a $16 billion acquisition offer for British commercial broadcast network ITV Plc. Despite the pessimism, the smart money was bullish on the stock as of the end of the third quarter, with the number of elite funds owning Comcast rising by four quarter-over-quarter to 80.
On the next page, we examine United States Steel Corporation, Live Nation Entertainment, and SFX Entertainment.
In other news, United States Steel Corporation (NYSE:X) is trending after the company announced it has reached a tentative three year labor agreement with the United Steelworkers union, which will cover more than 18,000 workers at the company’s Texas, Alabama, and Ohio operations. Although the deal won’t be finalized until January or later, investors have bid up shares of United States Steel Corporation (NYSE:X) by 2% in morning trading so far. A labor deal that both sides can agree upon will preclude the possibility of a strike that would damage United States Steel Corporation’s fundamentals. Ray Dalio’s Bridgewater Associates owned 990,071 shares at the end of September.
Concluding our list of trending stocks are Live Nation Entertainment, Inc. (NYSE:LYV) and SFX Entertainment Inc (NASDAQ:SFXE). According to a Reuters article, Live Nation Entertainment, Inc. (NYSE:LYV) may be interested in acquiring part or all of SFX, but the company isn’t in a hurry to get any deal done because of SFX’s potential debt restructuring. A deal between Live Nation and SFX could help SFX bondholders realize some value in some scenarios. SFX Entertainment Inc (NASDAQ:SFXE) put itself on sale earlier this year and received some preliminary signs of interest, although nothing has been finalized, and it is unclear whether there is any value in the equity. SFX is up 7% and Live Nation is flat on the news.