It was an eventful labor day weekend, as Saudi Arabia and Russia released a joint statement that tried to inject more confidence into the market, while the United States and China agreed to implement the Paris Climate Deal.
In this article, we’ll examine five companies that were also making noise over the long weekend: Monsanto Company (NYSE:MON), Herbalife Ltd. (NYSE:HLF), SunPower Corporation (NASDAQ:SPWR), Canadian Solar Inc. (NASDAQ:CSIQ), and Las Vegas Sands Corp. (NYSE:LVS). We’ll also use the latest 13F data to determine how hedge funds were positioning themselves in the stocks during the second quarter.
Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 750 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).
Bayer Inches Up Bid for Monsanto
Monsanto Company (NYSE:MON) was in the spotlight after Bayer raised its bid for the company to $127.50 per share from the previous offer of $125. Given that Monsanto previously rejected the $125 per share offer as being “financially inadequate,” it’s unclear if the company’s management will accept the slightly upgraded offer. If Monsanto rejects the new offer, there is the possibility that Bayer will go hostile and take the offer directly to Monsanto’s shareholders. Dan Loeb‘s Third Point established a new stake of 2 million shares of Monsanto Company (NYSE:MON) during the second quarter.
Icahn Buys More Herbalife
Carl Icahn‘s Icahn Capital recently bought some more shares of Herbalife Ltd. (NYSE:HLF). According to SEC records, Icahn’s fund bought 306,846 shares of Herbalife Ltd. (NYSE:HLF) on August 31 for a total of $18.5 million. That works out to an average price of $60.39 per share and brings Icahn’s total holding to over 19.6 million shares. Herbalife received good news in July when it settled with the FTC over its business practices for $200 million. Although the agency agreed not to bring pyramid charges against the company, Bill Ackman of Pershing Square, who is famously short the distributor, thinks that the various other conditions imposed by the FTC in the settlement could hurt Herbalife’s business. By buying more shares, Icahn is showing that he disagrees with Ackman.
On the next page we’ll examine why SunPower Corporation, Canadian Solar, and Las Vegas Sands were making headlines this weekend.
Weekend Agreement Puts Beaten-Up Renewable Energy Stocks in the Spotlight Again
SunPower Corporation (NASDAQ:SPWR) and Canadian Solar Inc. (NASDAQ:CSIQ) were each trending this weekend after the United States and China agreed to implement the Paris Climate Accords. Together, the U.S. and China account for around 40% of the world’s greenhouse emissions and the two nations’ commitment to limiting those emissions will go a long way towards containing the harmful effects that greenhouse gases are having on global temperatures. The agreement will also have a major positive impact on future demand for renewable energy, including solar. Although most analysts expected the U.S. and China to ratify the treaty, news of the agreement could improve sentiment in the beaten-up sector.
Of the 749 hedge funds that we track which filed 13F’s for the June quarter, 19 were long SunPower Corporation (NASDAQ:SPWR) on June 30, while 16 were long Canadian Solar Inc. (NASDAQ:CSIQ).
Las Vegas Sands Makes Progress in Macau
A few days after it was announced that Macau had turned in its first year-over-year monthly increase in total gambling revenue in over 24 months, Las Vegas Sands Corp. (NYSE:LVS) received some more good news after its majority-owned subsidiary, Sands China, was given the green light for 150 gaming tables at its Parisian casino. Previous expectations suggested that it was likely to be green-lighted for just 100 initially, plus 25 more each year through 2018. The increased initial gaming table quota could be considered evidence of more favorable government regulation and stronger demand. 23 hedge funds that we track owned shares of Las Vegas Sands Corp. (NYSE:LVS) at the end of June, down by seven funds from the end of the March quarter.