Why Traders Are Talking About Allergan, Teva, and 3 Other Stocks Today

It’s been a relatively quiet morning on Wall Street as all three index futures are close to flat. Crude futures, which were originally down by 1.2%, have also rallied somewhat. Among the stocks traders are talking about this morning are Allergan plc Ordinary Shares (NYSE:AGN), Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), ConAgra Foods Inc (NYSE:CAG), Commerce Bancshares, Inc. (NASDAQ:CBSH), and China Lodging Group, Ltd (ADR) (NASDAQ:HTHT). In this article, we’ll take a closer look at why each stock has the market buzzing and examine how elite funds are positioned among them.

Our research determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details here).

Teva and Allergan Delay the Closing Date of Generic Division Merger

Allergan plc Ordinary Shares (NYSE:AGN) and Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) are in the spotlight today after the two agreed to extend the close date of their generic division M&A deal to October 26, a delay of several months from the previous date of July 26. Allergan and Teva also agreed to increase the base working capital adjustment of the deal by $650 million-to-$800 million, reduce the cash component by $221 million, and to add Actonel and Carafate to the list of excluded products. Traders don’t believe the delay is a sign that the FDA has problems with the merger. Teva and Allergan shares are both well into positive territory in morning trading.

Of the 766 active funds that Insider Monkey tracks in its database, 170 funds owned shares of Allergan plc Ordinary Shares (NYSE:AGN) at the end of the first quarter, up by 11 funds from the close of the previous quarter. Meanwhile, the number of funds with Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) holdings fell by 11 quarter-over-quarter to 70 as of the end of March.

ConAgra Remains on Track for Spinoff

ConAgra Foods Inc (NYSE:CAG) is trending after the consumer staples company provided investors with an update on its planned spin-off into two companies later this year. According to the press release, Tom Werner will be the new CEO of the spun off Lamb Weston unit, while Tim McLevish will be the Executive Chairman. The separation will be structured as a tax-free spin-off of the Lamb Weston business and should help increase the valuation of the two companies. ConAgra believes it is on track to separate in the fall of 2016 and has recently filed a Form 10 registration statement. The number of funds in our system with ConAgra Foods Inc (NYSE:CAG) holdings rose by three quarter-over-quarter to 39 as of March 31.

On the next page we’ll find out why traders are talking about Commerce Bancshares and China Lodging Group this morning.
Commerce Reports Mixed Results

Commerce Bancshares, Inc. (NASDAQ:CBSH) reported earnings of $0.70 per share on revenue of $288.4 million for the second quarter, beating the bottom-line estimate by $0.02 per share but missing the top-line estimate by $4.58 million. Book value per share was $24.67 at the end of June, up from $22.15 a year earlier. The efficiency ratio was 61.3% while return on average common equity was a solid 11.7%. Look for the stock to do well if interest rates normalize. Shares are flat in morning trading as investors continue to digest the results. Eight funds that we follow had a bullish position in Commerce Bancshares, Inc. (NASDAQ:CBSH) at the end of March, down by two from the end of December.

China Lodging Provides Update

China Lodging Group, Ltd (ADR) (NASDAQ:HTHT) provided some preliminary second quarter hotel results on Wednesday, disclosing that it has added 125 hotel properties year-over-year and that it has 23 leased hotels and 563 manachised (franchised-and-managed) and franchised hotels in its pipeline as of June 30, 2016. The blended occupancy rate for the quarter was 86%, up by one percentage point from the same period last year, while the blended RevPAR in RMB was 156 ($23.32) for the second quarter, compared to 157 ($23.47) for the same period of 2015, a 1.2% year-over-year decline. China Lodging Group Shares are down by 2% in morning trading. 14 funds in our database were long China Lodging Group, Ltd (ADR) (NASDAQ:HTHT) at the end of March.

Disclosure: None