A Look At Financial Advisors’ Most-Searched Stocks Shows More Focus on Energy

The U.S stock market is extending its losing streak, with the S&P 500 and Dow Jones Industrial Average down by some 7% and 8% year-to-date, respectively, in volatile trading. As we have been doing for the past several weeks, we have analyzed the stocks that were the most searched for by financial advisors last week, in order to get a better idea regarding the market trends in the opinion of smart money investors. Interestingly, as oil slid below the $30 mark, financial advisors focused their attention on energy stocks; out of the top-20 most searched tickers for the week of January 10-to-January 16, 13 tickers represented energy stocks. At the same time, financial advisors kept their interest in technology, with Apple Inc. (NASDAQ:AAPL) maintaining its leading position in the list. In this article, we are going to take a look at the five most searched stocks among financial advisors last week, based on data from Trackstar, the official newsletter of Investing Channel’s Intuition.

Additionally, we are going to take a look at the smart money surrounding these stocks, based on our own analysis of equity portfolios of some 730 hedge funds and other institutional investors. Through extensive research, we determined that imitating some of their picks can help generate market-beating returns over the long run. However, the best approach 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 more details here).

As stated earlier, Apple Inc. (NASDAQ:AAPL) remained the most-searched for stock throughout the last week. The beginning of 2016 was marked by Apple’s stock falling below the $100 mark amid the overall market decline, worries about a slowdown of the Chinese economy (one of Apple’s key markets) and fears of a drop in iPhone sales that the company might register this year. However, investors might have overreacted. Since the beginning of the year, several analysts have reaffirmed their bullish rating on the stock. On January 19, Goldman Sachs reiterated its ‘Conviction-Buy’ rating and $155 price target on Apple Inc. (NASDAQ:AAPL), while last week, Nomura, JP Morgan, and several other analysts reiterated ‘Buy’ ratings and price targets that signal considerable upside potential. The investors from our database are also fond of Apple Inc. (NASDAQ:AAPL), with 133 funds holding around 2.80% of the company’s stock as of the end of September.

On the following pages we are going to discuss one biotech stock that ranked as the second most-searched ticker and three energy stocks.

Gilead Sciences, Inc. (NASDAQ:GILD) climbed to the second spot, from third during the prior week, as the stock inched down by around 5% between January 10 and January 16. The Street expects Gilead Sciences, Inc. (NASDAQ:GILD) to outperform this year and maintain its leadership position in the Hepatitis C market with its Sovaldi and Harvoni drugs. Last week, the company participated in the 34th Annual JP Morgan Healthcare Conference, where it presented some updates regarding its pipelines, though it has not provided its guidance for the current year. Following the conference, JPMorgan reiterated its ‘Overweight’ rating and $133 price target, while Bank of America upgraded the stock to ‘Neutral’ from ‘Underperform’, with a $107 price target.

In addition, last week Gilead Sciences, Inc. (NASDAQ:GILD) said that it had submitted a New Drug Application to the U.S. Food and Drug Administration for tenofovir alafenamide 25 mg. The product is an investigational, once-daily treatment designed for adults with chronic hepatitis B infection.

Gilead Sciences, Inc. (NASDAQ:GILD) is one of the favorite healthcare stocks among the funds we track and its dividend yield of 1.42% and strong fundamentals also make it the top biotech pick. A total of 90 funds from our database held shares of Gilead at the end of the third quarter of 2015, amassing 3.30% of the company’s outstanding stock.

Oil has also been in the spotlight as the sector is delving deeper into a glut amid the U.S lifting sanctions on Iran, leading to both Brent and WTI prices sliding below the $30 level. As stated earlier, 13 energy stocks ranked among the most-searched last week, versus just one a week earlier. One reason for that could be that financial advisors believe that the crude prices could soon reach the bottom and are searching for companies that would benefit the most from their pending rebound.

The third most-searched stock last week was Chevron Corporation (NYSE:CVX), whose stock is down by 12% year-to-date and has lost more than a quarter of its value over the last 52 weeks. Last week, the company said that it its first cargo of liquefied natural gas (LNG) from its Gorgon Project is on track to be shipped soon. The Gorgon project cost around $54 billion and is the world’s most expensive LNG project.

The Gorgon plant in Australia is structured as a joint venture, in which Chevron Corporation (NYSE:CVX) holds 47.3%, alongside Exxon Mobil Corporation (NYSE:XOM) and Royal Dutch Shell plc (ADR) (NYSE:RDS.A), which own 25% each, and other smaller stakeholders.

Among the investors we track, Chevron Corporation (NYSE:CVX) is not very popular, with 45 funds holding shares of the company at the end of September 2015, versus 50 funds a quarter earlier. Billionaires David E. Shaw of D. E. Shaw Co. and Ken Fisher of Fisher Asset Management owned 3.86 million shares and 2.62 million shares at the end of September.

Valero Energy Corporation (NYSE:VLO) is another energy stock that made the list (it was the only energy stock in the top 20 the previous week). As the crude-related stocks lost a lot of ground with the drop in oil prices, the refining stocks outperformed the sector and Valero Energy Corporation (NYSE:VLO) represents one of the best bets in the refining industry. The stock has advanced alongside increasing demand in refined products and analysts believe that the company will beat estimates this year. Last week, Morgan Stanley reiterated its ‘Buy’ rating on the stock and raised its price target to $100 from $90. Among the funds we track, Valero registered an increase in popularity during the third quarter of 2015, as the number of funds with long positions climbed to 56 from 48. Among the investors bullish on Valero Energy Corporation (NYSE:VLO) are D. E. Shaw, Cliff Asness’ AQR Capital Management, David Harding’s Winton Capital Management, and Clint Carlson’s Carlson Capital.

Schlumberger Limited. (NYSE:SLB) ranked as the fifth most-searched stock among financial advisors last week. After the market closes today, the oilfield service provider is expected to post its financial results for the previous quarter, with analysts’ consensus estimates indicating EPS of $0.63 on revenue of $7.8 billion, both of which would be down in year-over-year terms. The company announced in December that it would slash more jobs in anticipation of weaker activity this year. Several analysts issued updates on Schlumberger this year and while they reaffirmed positive ratings on the stock, they slashed their price targets on it. The most notable cuts came from Barclays and Deutsche Bank, which reduced their targets to $75 and $79 respectively. Among the funds we follow, Schlumberger Limited. (NYSE:SLB) registered an increase in popularity, with the number of bullish investors growing by six to 61 between July and September. Ken Griffin’s Citadel Investment Group, Fisher Asset Management, and Israel Englander‘s Millennium Management are among those owning substantial positions in Schlumberger Limited. (NYSE:SLB).

On the next page you can see the full list of the top 20 stocks searched for by financial advisors and some details regarding the hedge fund sentiment towards them.