It’s another green pre-market on Wall Street as all three index futures are positive. Sentiment remains optimistic as the ‘Brexit’ vote nears on Thursday.
Among the stocks trending this morning are Energy Transfer Equity LP (NYSE:ETE), Williams Companies Inc (NYSE:WMB), Hertz Global Holdings Inc (NYSE:HTZ), McKesson Corporation (NYSE:MCK), and Oi S.A. (ADR) (NYSE:OIBR). Let’s take a closer look at the latest developments surrounding these stocks and see investors tracked by us are positioned towards them.
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).
Energy Transfer Equity CEO Testifies in Court
Energy companies Energy Transfer Equity LP (NYSE:ETE) and Williams Companies Inc (NYSE:WMB) are in the news today after Energy Transfer CEO Kelcy Warren said that he feared the merger would cause a ratings downgrade. Former CFO Jamie Welch also added that the merger would cause an ‘implosion’. Due to the potential negative effects of the merger, Warren is ‘uninterested’ in restructuring a deal to make the merger go through. The two companies are in court to decide whether the deal can be completed or not. If the judge gives the go-ahead, Williams shareholders are slated to vote on June 27 to decide if they want to be acquired by Energy Transfer. Shares of both companies have fallen substantially due to lower energy prices.
Of the 766 elite funds we track, 31 funds owned $306.03 million worth of Energy Transfer Equity LP (NYSE:ETE) and 52 funds had a long position in Williams Companies Inc (NYSE:WMB) as of the most recent 13-F reporting period.
Hertz Nears Seperation Date
Hertz Global Holdings Inc (NYSE:HTZ) is in the spotlight today as the company’s planned separation of its worldwide equipment rental business and its car rental business nears. The tax-free separation is expected to be achieved through a dividend distribution of all of the capital stock of a new entity, Hertz Rental Car Holding Company, Inc. The dividend will be paid to existing shareholders of record as of June 22 and is expected to be completed on June 30. A total of 47 funds from our database owned shares of Hertz Global Holdings Inc (NYSE:HTZ) at the end of the first quarter, down by five funds from the previous quarter.
On the next page, we examine McKesson Corporation, and Oi S.A.
McKesson Considers IT Merger
McKesson Corporation (NYSE:MCK) management is considering merging its IT unit with Change Healthcare Inc. The combination of the two would create one of the largest companies in healthcare IT, and would be potentially worth an enterprise value of at least $10 billion. A separation of its IT unit would continue McKesson management’s strategy of shedding non-core assets to increase shareholder value. Shares of McKesson are down by 8% year-to-date and could use a positive catalyst. The number of funds tracked by us with holdings in McKesson Corporation (NYSE:MCK) rose by three quarter-over-quarter to 66 at the end of March.
Oi S.A. Seeks Bankruptcy Protection
Oi S.A. (ADR) (NYSE:OIBR) is in the spotlight today after the Brazilian telecom company filed for bankruptcy protection. The company has billions in debt and failed to reach a compromise with its creditors on restructuring that burden. Oi’s bankruptcy filing is the largest in Brazil’s history and showcases just how difficult Brazil’s recession has been. Six funds from our database were long Oi S.A. (ADR) (NYSE:OIBR) at the end of the first quarter.