The US stock market is mixed on Friday, as investors await the conclusion of the Fed’s FOMC two-day meeting that started today and amid a drop in crude futures below $43 per barrel.
Viking Therapeutics Inc (NASDAQ:VKTX), Caterpillar Inc. (NYSE:CAT), Sensata Technologies Holding N.V. (NYSE:ST), Ally Financial Inc (NYSE:ALLY), and McDonald’s Corporation (NYSE:MCD) are trending today for various reasons. In this article, we examine why traders are buying and selling the five stocks and take a look what the hedge funds and other investors tracked by our team think about the companies in question.
Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 700 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).
Viking Rises on Positive Proof-of-Concept Results
Nano-cap Viking Therapeutics Inc (NASDAQ:VKTX) shares are in the green today after a proof-of-concept showed positive top-line results in which the company’s product candidate VK0214 rapidly reduced plasma very long chain fatty acid levels by more than 25% in treated animals compared with vehicle controls. The study achieved its primary objective of lowering plasma VLCFA levels after six weeks of treatment and the company plans to present detailed results at an upcoming scientific meeting. None of the elite funds we track owned shares of Viking Therapeutics Inc (NASDAQ:VKTX) at the end of March. As with all nano-caps, traders should do due-diligence both buying and selling.
Caterpillar Beats
A few days after Komatsu bought out Joy Global, Caterpillar Inc. (NYSE:CAT) reported solid second-quarter results with EPS of $1.09 on sales of $10.34 billion, beating the consensus estimates by $0.13 per share and $280 million, respectively. Caterpillar beat estimates largely because management was successful in controlling costs and improving efficiency. Despite the beat, weak global macro-economic conditions will likely still weigh on the company’s results. Management sees 2016 revenue coming in at the bottom of the previously guided range of $40 billion to $42 billion, at around $40-$40.5 billion. Management also expects full-year profit coming in at around $2.75 per share in terms of GAAP earnings and at around $3.55 per share, when excluding restructuring costs. The number of investors from our database with holdings in Caterpillar Inc. (NYSE:CAT) rose by six to 37 during the first quarter.
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On the next page, we examine why Sensata Technologies Holding NV, Ally Financial, and McDonald’s Corporation are in the spotlight.
