With many stocks showing seasonal signs of low volatility as traders on Wall Street and Connecticut prepare for the holidays, shares of Heartland Payment Systems, Inc. (NYSE:HPY), EQT Midstream Partners LP (NYSE:EQM), Seritage Growth Properties (NYSE:SRG), and Allegheny Technologies Incorporated (NYSE:ATI) are trending for various reasons. Let’s find out why.
In addition, let’s also examine relevant hedge fund sentiment toward the stocks. Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by 52 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. 48.6% gain for the S&P 500 Index (see the details here). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).
Leading the way in our list of trending stocks is Heartland Payment Systems, Inc. (NYSE:HPY), whose shares surged 13.5% after Bloomberg published an article stating that Global Payments is in talks to purchase Heartland Payment Systems, Inc. (NYSE:HPY). Although the talks could still fall apart at any time, a deal could be announced later this month. There has been substantial consolidation in the card-processing space in recent quarters as card processors merge to to capture more growth from online and mobile shopping. Heartland is the 6th largest card processor by transaction volume in the U.S. and provides payment services to more than a quarter of a million business locations in America. A total of 13 funds from our database owned around 8.7% of the company’s float as of September 30, with Ken Fisher’s Fisher Asset Management among them.
Second on our list of trending stocks is midstream company EQT Midstream Partners LP (NYSE:EQM). Although EQT Midstream Partners’ shares are off 0.6% for the day, they remain firmly above their Monday lows as energy midstream investors breathe a sign of relief after Kinder Morgan Inc (NYSE:KMI) lowered its dividend less than expected on Tuesday. Given Kinder Morgan is considered a bellwether in the industry and Kinder shares have stabilized in recent trading sessions, logic dictates that shares of other midstream oil and gas companies are less susceptible to downside moves. According to our extensive database of around 730 elite funds, 13 funds were long about 1.6% of EQT’s stock, according to the latest round of 13F filings. Although shares are down 19.5% year-to-date, EQT Midstream Partners LP (NYSE:EQM)’s 3.94% dividend yield is safe under current conditions.
On the next page, we will examine Seritage and Allegheny Technologies.