It’s a good day to be a bull on Wall Street as major indexes opened higher. Among the stocks making some waves are some of the world’s top tech companies.
In this article, we take a closer look at why Tesla Motors Inc (NASDAQ:TSLA), SolarCity Corp (NASDAQ:SCTY), Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and McDonald’s Corporation (NYSE:MCD) are trending today. In addition, we are going to assess the smart money sentiment towards these stocks.
We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).
Investment Bank Makes a Mistake on Tesla/SolarCity Deal
Tesla Motors Inc (NASDAQ:TSLA) and SolarCity Corp (NASDAQ:SCTY) are in the spotlight today after a regulatory filing showed that the investment bank Lazard had made an error in terms of determining the value of the solar company. Due to the mistake of double counting some projected debt, the investment bank thought SolarCity was worth $400 million less than it otherwise would have been. However, both SolarCity and Tesla have said that the error will not change their view on their pending merger. In separate news, Tesla said in a regulatory filing on Wednesday that it plans to raise more capital by the end of this year, in part to support its proposed merger with SolarCity. Tesla has to pay $422 million in cash to various bondholders in the third quarter and the company will likely need more money if it is to achieve its goal of disrupting the trillion dollar energy and transportation markets. Of the around 750 elite funds Insider Monkey tracks, 36 funds were long Tesla Motors Inc (NASDAQ:TSLA) and 26 funds held shares of SolarCity Corp (NASDAQ:SCTY) at the end of June.
Apple May Repatriate Some of its Offshore Cash as Early as 2017
Apple Inc. (NASDAQ:AAPL) is in the headlines today after CEO Tim Cook said the company could repatriate some of its $215 billion cash and other liquid holdings held overseas in 2017. If that happens, Apple will have more ammunition to raise its dividend or to buy back more of its stock. Given that Apple and other major companies currently face a 35% corporate tax rate if they bring profits back home, Cook’s comments suggest that Apple believes the profit repatriation tax rate for next year will be substantially lower. That’s not only good news for Apple, but for a lot of other companies that have money overseas. The anticipation of more foreign profit-fueled buybacks next year could be one reason why the S&P 500 is close to an all time high even when the Federal Reserve has opened said it will likely raise interest rates over the coming quarters. In other tax related news, Apple has said that it expects its appeal against the recent $14.5 billion back tax bill from the EU commission to succeed. Warren Buffett‘s Berkshire Hathaway raised its position in Apple Inc. (NASDAQ:AAPL) by 56% in the second quarter to over 15 million shares.
On the next page, we find out why Amazon.com, and McDonald’s Corporation are making headlines.
WSJ: Two More American Companies Could Experience the Apple Treatment in Europe
According to the Wall Street Journal, Amazon.com, Inc. (NASDAQ:AMZN) and McDonald’s Corporation (NYSE:MCD) could be next in terms of facing a back-tax bill in Europe. According to the article, antitrust regulators in the continent have been examining the two companies’ tax arrangements that may have lowered their total tax bills unfairly. The news of the EU examining Amazon and McDonald’s follows the recent $14.5 billion back-tax bill given to Apple for the company’s potentially unfair tax practices in Europe. It remains to be seen whether European regulators will charge the two companies though. The U.S. government has adamantly argued against the tax bills and both McDonald’s and Amazon have said that they believe they have paid their tax dues appropriately. A total of 145 funds from our database owned shares of Amazon.com, Inc. (NASDAQ:AMZN) at the end of the second quarter, up by 12 funds from the previous quarter. Meanwhile, 63 investors had a bullish position in McDonald’s Corporation (NYSE:MCD), down by 20 funds from the previous quarter.