U.S stocks are heading south today, with oil prices putting pressure on the markets again. Major indices are down by more than 0.6% as the price of crude oil is tanking by 4.6% and none of the earnings reports released this morning managed to have a major impact on the direction of the market. In this article we’ll take a look at some of the stocks that have managed to stay in green territory despite the market headwinds and see how top investors have been trading them of late. Those stocks are McDonald’s Corporation (NYSE:MCD), Tyco International plc (Ireland) Ordinary Share (NYSE:TYC), Amira Nature Foods Ltd (NYSE:ANFI) and Affimed NV (NASDAQ:AFMD).
The smart money sentiment is an important metric that can be used to assess the long-term profitability of a stock. While there are thousands of stocks trading daily on the market, taking a look at what hedge funds think about certain companies can narrow down the search significantly. At Insider Monkey, we track more than 700 hedge funds, whose 13F filings we analyze as part of our small-cap strategy. Our research has shown that imitating a portfolio that includes the 15 most popular small-cap stocks among hedge funds can outperform the market by as much as 95 basis points per month on average (see more details here).
McDonald’s Corporation (NYSE:MCD)‘s stock is on a roll today, boosted by the company’s latest earnings report. The All Day Breakfast menu helped U.S sales grow by 5.7% during the fourth quarter, while global sales were up by 5%. The fast-food chain reported revenue of $6.34 billion and adjusted earnings of $1.28 per share, beating market expectations of $6.24 billion in revenue and earnings of $1.23 per share. The company also said it intends to open 1,000 new restaurants during 2016, while 500 weaker-performing locations, mostly in the U.S, are expected to close.
Roughly 10% of the top hedge funds in our database had McDonald’s Corporation (NYSE:MCD) in their portfolios at the end of the third quarter, together controlling 6.6% of the company’s common stock. Jonathon Jacobson, the manager of Highfields Capital Management, is a big fan of McDonald’s, having more than 10% of his public equity capital in the stock. According to its latest 13F filing, Highfields Capital holds 11.8 million shares, up by 21% over the third quarter.
The takover of Tyco International plc (Ireland) Ordinary Share (NYSE:TYC) by Johnson Controls Inc (NYSE:JCI) is a done deal, with the U.S manufacturer preparing to relocate to Ireland to reduce its tax bill. Under the terms of the deal, Tyco shareholders will own 44% of the newly created entity, while Johnson Controls shareholders will control the remaining 56% of the company and will receive $3.9 billion in cash. This means Tyco shares are valued at $34.88 apiece, which is an 11% premium over Friday’s closing price. The change of fiscal domicile is expected to generate $150 million in annual tax synergies.
Despite continuous efforts from the U.S government to prevent companies from engaging in inversion deals, big companies are in a rush to relocate in order to dodge the U.S tax regime. A similar merger took place just weeks ago, as U.S drug maker Pfizer Inc. (NYSE:PFE) reached a deal to acquire its Ireland-based competitor Allergan plc Ordinary Shares (NYSE:AGN) for $160 billion.
Hedge fund sentiment towards Tyco International plc (Ireland) Ordinary Share (NYSE:TYC) cooled down a bit over the third quarter, with the number of long positions declining to 35 from 39 during the period. Ken Griffin is very bullish on this stock however, having increased his holding by more than 400% to 5.1 million shares.
The popularity of Johnson Controls Inc (NYSE:JCI) tumbled as well, with the number of elite funds invested in the stock dropping to 32, or 4.5% of the funds we follow. Edinburgh Partners, run by Sandy Nairn, held the largest stake in Johnson Controls at the end of September, of 1.89 million shares, down by 9% over the quarter.
The share boosts for Amira Natue Foods and Affimed are discussed on the second page.