Morning Movers & Shakers: McDonald’s, Exxon Mobil, United Continental, More

U.S stock futures are pointing towards moderate gains on Wednesday, following three consecutive upbeat trading days. Investors are also awaiting the release of the Fed’s Beige Book survey of current economic conditions today, which could play on market sentiment.

Among the noteworthy stocks making noise this morning are McDonald’s Corporation (NYSE:MCD), Exxon Mobil Corporation (NYSE:XOM), InterOil Corporation (USA) (NYSE:IOC), Honeywell International Inc. (NYSE:HON), and United Continental Holdings Inc (NYSE:UAL). Let’s why out why these stocks are in the spotlight today and analyze what hedge funds think of them.

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).

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McDonald’s Corporation’s Struggles in China

McDonald’s Corporation (NYSE:MCD) is raising eyebrows this morning following a report published by the Financial Times on Tuesday claimed that the fast food company is struggling to woo top-caliber bidders for its China and Hong Kong franchises. Investors are pushing for better quality control as part of the sale and have balked at some of the conditions of the deal, which they deem “onerous”, including that management must be kept intact for two years as well as a restriction on taking the franchise public. McDonald’s attempted sale of its China and Hong Kong franchises has moved into a second round of bidding and could be valued at between $2 billion and $3 billion. The source also claimed that the currently shortlisted candidates have no experience in the fast food business.

Among the funds that we track, 83 were bullish on McDonald’s Corporation (NYSE:MCD) at the end of the first quarter. Among them, Jonathon Jacobson’s Highfields Capital Management owned around 4.75 million shares of the company.

Exxon Mobil Bids to Acquire InterOil

Investors are paying attention to the shares of Exxon Mobil Corporation (NYSE:XOM) and InterOil Corporation (USA) (NYSE:IOC) this morning after Reuters reported that Exxon Mobil has tabled a bid to acquire InterOil at a price that beats the $2.2 billion offer made by Australia’s Oil Search Ltd in May. The source added that Exxon’s offer comprises stock and a Contingent Value Right, which could also provide cash to Interoil shareholders on a sliding scale, based upon the results of Interoil’s pending gas deposit discovery in the Elk-Antelope gas fields.

Among the hedge funds that we track, 60 disclosed long positions in Exxon Mobil Corporation (NYSE:XOM) as of the end of the first quarter of 2016, while just ten were long InterOil Corporation (USA) (NYSE:IOC).

On the next page we’ll take a look at the latest activity concerning Honeywell International and United Continental.

United Continental To Book $434 Million in Charges

United Continental Holdings Inc (NYSE:UAL) is making moves today after it was announced on Tuesday that United Airlines would take $434 million in charges in the second quarter, mainly due to the Federal Aviation Administration’s decision to remove the restriction on flights at Newark Liberty International Airport. The restriction, which was removed in April, had dented the Chicago, Illinois-based airliner’s valuable landing and takeoff slots.

As of the end of March, 61 funds in our system owned shares of United Continental Holdings Inc (NYSE:UAL), down from 73 a quarter earlier. Paul Reeder and Edward Shapiro’s PAR Capital Management owned around 14.38 million shares of the company on March 31.

Honeywell, Airbus to Develop a System to Avoid Runway Excursions

Honeywell International Inc. (NYSE:HON) is in the spotlight today after the Wall Street Journal revealed that the company has reached an agreement with Airbus Group SE to develop a system to avoid runway excursions by aircraft. The source said both companies are expected to announce the deal today. The system would be in accordance with the European safety rules to combat runway veer-offs, the report added. A total of 55 hedge funds in our database were bullish on Honeywell International Inc. (NYSE:HON) at the end of the first quarter.

Disclosure: None