With the markets sitting below all-time highs, volatility among the indexes is almost non-existent. The VIX fear index is at a meager 12.51 and the bulls are unafraid of the various downside macro-risks, including a Chinese slowdown or the ramifications of the Brexit.
Among the stocks capturing investor interest today are Tesla Motors Inc (NASDAQ:TSLA), PDC Energy Inc (NASDAQ:PDCE), Lantheus Holdings Inc (NASDAQ:LNTH), Investors Real Estate Trust (NYSE:IRET), and Chesapeake Energy Corporation (NYSE:CHK). Let’s examine why each company is trending and use the latest regulatory filings to see how the smart money has positioned the five in their portfolios.
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).
Traders are talking about Tesla Motors Inc (NASDAQ:TSLA) today after the company said that its autopilot feature wasn’t being used when a Tesla owner fatally crashed into a tree near Amsterdam this week. Although Tesla’s cars are some of the safest available on the market, the vehicle was traveling at speeds of more than 155 kph (96 mph) when it struck the tree, which would make survival in any vehicle unlikely. Tesla caught substantial criticism for the death of a Model S driver in May who was using the autopilot feature at the time of the crash. Although critics have blamed Tesla for being too aggressive in adopting new autonomous technology features, Tesla’s founder, Elon Musk, has ardently defended the technology, saying that it saves more lives on balance. Given that the company has said that it might need to raise more capital this year, it is important for Tesla to maintain positive market sentiment in its stock in the near-term and not have any autopilot-related accidents. Of the 749 hedge funds that we track which filed 13F’s for the June quarter, 36 had a long position in Tesla Motors Inc (NASDAQ:TSLA) at the end of June.
With the markets now more open to expansionary capital financing for E&P’s, PDC Energy Inc (NASDAQ:PDCE) is cashing in on the conditions by announcing public offerings of common stock of 6.5 million shares and convertible senior notes of $100 million in aggregate principal due 2021. As is customary, PDC Energy has given the underwriters of the equity offering an option to buy more shares (975,000) for 30 days and the underwriters of the senior notes the option to buy $15 million in additional notes for 30 days. PDC intends to use the net proceeds to fund a portion of its previous acquisition of some acreage in the Permian and for general corporate purposes. The pricing of the offering was not disclosed in the initial press release. 17 funds that we track were bullish on PDC Energy Inc (NASDAQ:PDCE) at the end of the second quarter, down by seven funds from the previous quarter’s end.
On the next page we’ll find out why Lantheus Holdings, Investors Real Estate Trust, and Chesapeake Energy are each trending this morning.