Here’s Why AMD, InvenSense, Amazon, and More Are Trending

Despite the spate of major earnings releases this week, the markets have been rather calm — the S&P 500 fell by just 0.6% during the week, while the Dow Jones inched up by 0.09%.

Among the stocks capturing attention this weekend are several tech stocks, as well as two other equities. In this article, we’ll put Advanced Micro Devices, Inc. (NASDAQ:AMD), InvenSense Inc (NYSE:INVN), General Electric Company (NYSE:GE), Baker Hughes Incorporated (NYSE:BHI), and Amazon.com, Inc. (NASDAQ:AMZN) under the microscope to see why each stock is trending. We’ll also analyze how hedge funds have been trading each stock using the latest 13F data.

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).

Joe Ravi / Shutterstock.com

Advanced Micro Devices, Inc. (NASDAQ:AMD) experienced some volatility on Friday after a contributor to Zero Hedge, Cincarious Research, published an article entitled ‘Sources Say Oracle In Final Stages Of Advanced Micro Devices Buyout, Seeks Hardware Play On VR/AR.’ The article likely caused AMD sentiment among algorithmic trading systems to improve a bit. AMD shares later retreated, however, after Paul Murphy of FT Alphaville wrote that the Cincarious Research story was likely a “hoax operation” and questioned the outfit’s internet presence. Given the price action in AMD, it seems that most of the market agrees with Murphy and doesn’t believe Oracle is close to buying AMD. 25 funds that we track owned $223.23 million worth of Advanced Micro Devices, Inc. (NASDAQ:AMD) shares on June 30, a huge increase from 13 funds with $25.3 million in AMD holdings on March 31.

InvenSense Inc (NYSE:INVN) shares surged by 8.88% in late-afternoon trading on Friday after Reuters reported that its sources said the company is considering strategic alternatives, include a potential sale. Given the spate of M&A deals in the semiconductor industry recently, it wouldn’t be surprising that InvenSense is looking to potentially merge with another semiconductor firm. 14 funds in our system were long InvenSense Inc (NYSE:INVN) at the end of the second quarter, down by four funds from the end of the first quarter.

On the next page we’ll find out why investors are buzzing about General Electric, Baker Hughes, and Amazon.

General Electric Company (NYSE:GE) and Baker Hughes Incorporated (NYSE:BHI) are trending after the Wall Street Journal reported that Baker Hughes’ CEO, Martin Craighead, has confirmed that his company is in talks with GE.

“I want to clarify that while we have been in discussions with GE, nothing is concluded and there is no guarantee anything will be concluded,” Craighead said in an email.

Although a GE spokesperson said on Thursday that the conglomerate isn’t considering an outright purchase, the company is interested in forming a potential partnership. Because neither GE nor Baker Hughes elaborated on what ‘partnership’ meant, investors are uncertain as to what the two companies are striving for. Some Wall Street analysts speculate that a partnership means that GE could give itself an option to purchase Baker Hughes down the road. Other analysts speculate that the term means GE could merge its oil and gas segment with Baker Hughes to unlock synergies, and then spin the combined company into a stand-alone company in a tax-advantageous way.

Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 44 were long Baker Hughes Incorporated (NYSE:BHI) at the end of June, while 57 owned shares of General Electric Company (NYSE:GE).

Amazon.com, Inc. (NASDAQ:AMZN) is in the spotlight after the e-commerce giant began offering its Prime service in China for the first time on Friday. For its customers in China, Amazon’s Prime free-shipping service costs 388 yuan annually, or over $40 less than the current U.S. cost of $99 per year. Although it won’t include any free digital content, Prime’s Chinese service does include free shipping on purchases of over 200 yuan ($29.50) on millions of participating overseas products. Given the size of the e-commerce market in China, Amazon bulls hope the company’s new Prime service will help it rapidly gain marketshare from the current 800-pound-gorilla in the space, Alibaba Group Holding Ltd (NYSE:BABA). Ken Fisher’s Fisher Asset Management owned 1.98 million shares of Amazon.com, Inc. (NASDAQ:AMZN) at the end of September, which accounted for 2.93% of the value of the fund’s public equity portfolio at the time.

Disclosure: None