Why These Trending Stocks Are Shaking Up The Markets Today

Shares of Exxon Mobil Corporation (NYSE:XOM), Halliburton Company (NYSE:HAL), and Campus Crest Communities Inc (NYSE:CCG) are trending this morning, as noteworthy events affect each stock. Let’s take a closer look at these events and analyze the relevant smart money sentiment toward the three.

But why do we track smart money activity? From one point of view we can argue that hedge funds are consistently underperforming when it comes to net returns over the last three years, when compared to the S&P 500. But that doesn’t mean that we should completely neglect their activity. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. In our back-tests covering the 1999-2012 period hedge funds’ top small-cap stocks edged the S&P 500 index by double digits annually. The 15 most popular small-cap stock picks among hedge funds also bested passive index funds by around 53 percentage points over the 37 month period beginning from September 2012, returning 102% (see the details here).

Exxon Mobil Corporation (NYSE:XOM) is trending after Democrats in the House Oversight and Government Reform Committee requested the Department of Justice investigate it for ‘organizing a sustained deception campaign disputing climate science and failing to disclose truthful information to investors and the public’. The Democrats say Exxon is similar to cigarette companies in the 90’s, who tried to conceal smoking’s negative health effects. Exxon has enough trouble as it is with the low crude prices and the S&P recently putting the company’s credit rating in the outlook negative territory. As it stands, however, Exxon is still the safest investment in the energy sector with its strong cash flow and low cost of production. Shares are attractive at current prices for long-term investors because crude prices can’t stay low forever. The stock also pays a nice 3.54% dividend yield. Shares are down by 1.21% in morning trading.

Hedge funds are mixed on Exxon Mobil Corporation. Of the 730 elite funds we track, 67 owned $3.64 billion of the company’s shares on June 30, or just 1.00% of the float, versus figures of 63 funds and $4.01 billion in shares on March 31. Donald Yacktman’s Yacktman Asset Management owned 6 million shares at the end of June while Phillip Gross and Robert Atchinson’s Adage Capital Management owned 4.84 million shares at the end of the second quarter.

On the next page, we analyze why Campus Crest Communities and Halliburton are making headlines today

Halliburton Company (NYSE:HAL) is down by 2.3% after reporting mixed third quarter earnings. The oil services giant earned $0.31 on revenues of $5.58 billion, beating earnings estimates by $0.04 per share but missing revenue estimates by $60 million. Shares are down by 4% year-to-date as low energy prices weigh on oil services demand. Despite the weak year-to-date performance, we feel Halliburton is a good long-term holding, given its leading position in the services sector and the expected synergies from Halliburton’s future closing of the Baker Hughes Incorporated (NYSE:BHI)’s acquisition. Oil prices will eventually normalize and demand for Halliburton’s expertise will increase. Savvy investors can buy Halliburton at a discount by buying Baker Hughes instead (if the deal closes successfully).

According to our data, hedge funds were bullish on Halliburton Company (NYSE:HAL) in the second quarter. A total of 69 funds reported stakes worth $4.21 billion (representing 11.50% of the float) in the latest round of 13F filings, up from 60 funds and $2.99 billion respectively a quarter earlier.

Shares of Campus Crest Communities Inc (NYSE:CCG) are up by 18.3% after the company agreed to sell itself to affiliates of Harrison Street Real Estate Capital, LLC for ‘$6.90 per share in cash (the “Cash Consideration”), plus a pro-rata portion of the net proceeds from the Montreal Sale (the “Contingent Consideration”), currently estimated to be $0.13 per share based on current exchange rates’. The board of Campus Crest has already agreed to the transaction. Hedge funds are big beneficiaries of today’s move, as the funds we track owned $90.02 million of the company’s shares, 25.1% of its common shares, at the end of the second quarter.

Disclosure: None