Friday’s Headline-Making Stocks: Monsanto (MON), Apple (AAPL), Herbalife (HLF), More

It’s the last day of the trading week (TGIF!), and all three index futures are close to flat, while crude futures have slipped by roughly 1%. Among the stocks trending this morning are Monsanto Company (NYSE:MON), Herbalife Ltd. (NYSE:HLF), Apple Inc. (NASDAQ:AAPL), AMC Entertainment Holdings Inc (NYSE:AMC), and Carmike Cinemas, Inc. (NASDAQ:CKEC). Let’s take a closer look at why the five stocks are garnering attention today and see how the collection of top funds tracked by Insider Monkey have been trading them of late.

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).

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Bayer Raises Its Bid for Monsanto 

Monsanto Company (NYSE:MON) is in the spotlight today after Bayer upped its takeover offer to $125 per share from the previous $122 per share offer. Given that Monsanto had previously rejected Bayer’s $122 per share offer as being too low, many analysts don’t believe Bayer’s new offer will be sufficient either. If Monsanto rejects Bayer’s takeover bid and Bayer doesn’t further increase its bid, Monsanto has a contingency plan; the company has talked with BASF in regards to potentially combining their agrochemical segments to unlock substantial synergies. Larry Robbins‘ Glenview Capital owned more than 11.00 million shares of Monsanto Company (NYSE:MON) at the end of March.

Ackman Still Short Herbalife 

Although it has been several years since Bill Ackman‘s Pershing Square initially unveiled its Herbalife Ltd. (NYSE:HLF) short, Mr. Ackman’s fund is still short the MLM. Apparently Mr. Ackman is willing to pay a carrying cost of over $100 million a year to prove his thesis right. Mr. Ackman recently said:

“The only way this thing gets resolved in my opinion is if Herbalife makes material changes to their incentive structure to stop the incentives to recruit. My guess is that is what the government is pushing for.”

Whether the government will make Herbalife change its recruiting practices is unknown right now. Herbalife shares are up by 14% this morning after the company announced a settlement with the FTC for around $200 million. The company also announced in a press release that Board member Carl Icahn was now free to purchase up to 35% of the company’s shares.

“I have always believed in Herbalife’s strong fundamentals and am pleased the Board has decided to increase my ownership limit from 25% to 34.99% of the Company’s outstanding shares.,” Mr. Icahn stated in a press release. Mr. Icahn’s Icahn Capital LP was the top shareholder of Herbalife Ltd. (NYSE:HLF) in our database at the end of the first quarter, owning 17.00 million shares.

On the next page we’ll find out why Apple, AMC Entertainment, and Carmike Cinemas are trending this morning.
A News Story Shines a Light on Apple TV

Apple Inc. (NASDAQ:AAPL) executive Eddy Cue recently spoke with The Hollywood Reporter, and although the company doesn’t plan to buy a Hollywood content studio or directly compete against Netflix, Inc. (NASDAQ:NFLX), Hollywood agents are apparently “very, very excited” about Apple’s future online TV plans. In the article, Mr. Cue says that Apple’s goal is to make Apple TV “a lot better box than a cable box” and that Apple is trying to build a platform that allows anyone to transmit content to Apple consumers. At this stage, according to Mr. Cue, Apple “is only going into the content business [with projects] that we think are really tied to our products. Right now, that’s Apple Music.”

Given that Apple has been rumored to have held talks with Time Warner Inc (NYSE:TWX), the only-product-related stance could potentially change if the economics of online video change. Apple does need another product to help diversify it from the iPhone and the film/television content and distribution sector is a huge industry. Of the 766 active funds that we track, 152 were long $14.82 billion worth of Apple Inc. (NASDAQ:AAPL) shares as of March 31, which accounted for a modest 2.50% of the float.

AMC Considers Higher Bid

According to Reuters, AMC Entertainment Holdings Inc (NYSE:AMC) is reportedly considering raising its bid for Carmike Cinemas, Inc. (NASDAQ:CKEC). Some Carmike shareholders are not satisfied with AMC’s $30 per share bid, and want a higher price. Although AMC has previously said that the economics of the merger would not be as great at a price above $30, AMC does seem to want to be a consolidator of the industry. Any bid increase could be incremental, however, and there is no guarantee that AMC won’t walk away instead. Carmike has postponed its decision to approve the merger by ten days, to July 25 to give AMC more time to make an updated bid. 15 funds in our system had a long position in AMC Entertainment Holdings Inc (NYSE:AMC) on March 31, while 26 funds were long Carmike Cinemas, Inc. (NASDAQ:CKEC) at the end of the first quarter.

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