Why Whole Foods, Wal-Mart and Three Other Stocks Are Trending Today?

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We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

Bullish Barron’s Write Up On Whole Foods Market

Whole Foods Market, Inc. (NASDAQ:WFM) is trading 2.5% higher after a Barron’s article predicted that the stock could rebound as much as 20% over the next 12 months as cost cuts and the launch of new smaller stores help the bottom line. Whole Foods’ same store sales decline is expected to moderate over this quarter and next and could turn positive as its newly-found competitive pricing increases demand. Adding to profits and revenues will be Whole Foods Market, Inc. (NASDAQ:WFM)’s new 365 value chain, which is a smaller store format featuring value items. The new store concept is expected to eventually ramp up to 1,200 stores. Cliff Asness’ AQR Capital Management owned over 1.3 million shares of Whole Foods Market at the end of March.

BlackRock Sells Some Real Estate

BlackRock, Inc. (NYSE:BLK) is in the spotlight today after the firm scored the largest single-tower real estate deal in Singapore. According to Bloomberg, the sovereign wealth fund Qatar Investment Authority has agreed to purchase BlackRock’s Asia Square Tower 1 for around $2.5 billion. The tower is 90% occupied and counts numerous financial firms as tentpole tenants. The sale breathes some lift into the Singapore real estate market. Ken Fisher’s Fisher Asset Management owned 75,737 shares of BlackRock, Inc. (NYSE:BLK) at the end of the first quarter.

On the next page, we examine Harley-Davidson, Brinker International, and Wal-Mart Stores.

Goldman Downgrades Harley-Davidson

Harley-Davidson Inc (NYSE:HOG) has inched down by around 3% so far today after analysts at Goldman Sachs downgraded the company to ‘Neutral’ from ‘Buy’ and trimmed their price target to $50 from $55. The analysts cited channel checks that indicate softer demand despite a less competitive environment. Harley-Davidson Inc (NYSE:HOG) is not exactly a millennial favorite and the company might need to adjust for shares to do well over the next decade or two. Of the 766 elite funds we track, 20 funds owned $683.48 million worth of Harley-Davidson Inc (NYSE:HOG)’s stock, which accounted for 7.20% of the float on March 31, versus 24 funds and $524.77 million, respectively, on December 31.

Analysts Give the Thumbs Up to Brinker 

Analysts at Telsey Advisory Group gave Brinker International, Inc. (NYSE:EAT), the owner of Chili’s and Maggiano’s, the thumbs up today. The advisory group initiated coverage on the stock with a $52 price target and an ‘Outperform’ rating, expressing belief that management will execute on their plan to increase traffic and cost efficiencies. Brinker International, Inc. (NYSE:EAT)’s shares are down by 4% year-to-date and yield a 2.8% dividend payout at current prices. AQR Capital Management was one of the top shareholders of Brinker at the end of March.

Jefferies Likes Wal-Mart 

Wal-Mart Stores, Inc. (NYSE:WMT)’s stock has inched up on light volume after analysts at Jefferies upgraded the stock to ‘Buy’ from ‘Hold’ and raised their price target to $82 from $60. As reasons for the upgrade, the analysts cited higher sales and earnings as well as improving conditions. Despite the competition from Amazon.com, Inc. (NASDAQ:AMZN), Wal-Mart Stores, Inc. (NYSE:WMT) is still a cash flow machine and the stock sports a 2.8% dividend yield at current prices. The number of elite funds from our database with holdings in Wal-Mart rose by five to 54 during the first quarter.

Disclosure: none