It’s a green day on Wall Street after the Democrats won back control of the House. Although a split Congress likely means less laws passed, investors evidently like the more ‘checks’ part in the checks and balances of government. Among the stocks that are on the move after election day are Newell Brands Inc. (NYSE:NWL), Office Depot Inc. (NYSE:ODP), ARRIS International plc (NASDAQ:ARRS), Anadarko Petroleum Corporation (NYSE:APC), and PDC Energy Inc. (NASDAQ:PDCE). Let’s take a look at why traders and buying and selling.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 17.4% year to date and outperformed the market by more than 14 percentage points this year. This strategy also outperformed the market by 3 percentage points in the fourth quarter despite the market volatility (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Newell Brands Inc. (NYSE:NWL) is higher by around 1% after the company announced that it would sell two divisions, Jostens and Pure Fishing for a combined around $2.5 billion in after tax proceeds. Specifically, the company will sell Pure Fishing to Sycamore Partners and Jostens to Platinum Equity. Shareholders like the deal as it improves the company’s balance sheet. Both deals are expected to close in Q4. As for smart money sentiment, Newell Rubbermaid Inc. (NYSE:NWL) has experienced an increase in hedge fund interest (among the funds that we track) lately. NWL was in 33 hedge funds’ portfolios at the end of the second quarter of 2018. There were 30 hedge funds in our database with NWL positions at the end of the previous quarter.
Office Depot Inc. (NYSE:ODP) shares have surged over 22% as of the afternoon after the retailer reported a better than expected third quarter. Adjusted EPS beat the consensus by a penny, coming in at $0.13 per share, while sales also beat the estimate of $2.83 billion, coming in at $2.9 billion. Even better, management raised FY18 sales outlook to $11 billion from the previous $10.8 billion. Management also sees FY19 revenue of $11.1 billion, easily exceeding the consensus of $10.79 billion. The stronger guidance could indicate that ODP is finally holding its own against Amazon and others that are encroaching on its territory. At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. By comparison, 25 hedge funds held shares or bullish call options in ODP heading into this year.
ARRIS International plc (NASDAQ:ARRS) is 12% higher after CNBC reported that CommScpe is ‘near a deal’ to buy Arris for potentially more than $31 per share. The deal is said to be all-cash although it hasn’t been finished and the transaction could still fall apart. CommScope’s rationale for doing the deal would be to gain more scale and diversification. In terms of the holdings of specific funds that we track that owned Arris, Scopia Capital was the largest shareholder of Arris Group, Inc. (NASDAQ:ARRS), with a stake worth $100.4 millions reported as of the end of June. Trailing Scopia Capital was Atlantic Investment Management, which amassed a stake valued at $96.8 millions. Voce Capital, MD Sass, and Dorsal Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Anadarko Petroleum Corporation (NYSE:APC) and PDC Energy Inc. (NASDAQ:PDCE) are each higher by over 5% after voters in Colorado rejected a proposal that would have made it more difficult to drill for oil and gas in the state. Voters in the state rejected Proposition 112, which would have mandated at least 2,500 feet separation between drilling activities and vulnerable or occupied areas. Opponents of the proposition have argued that the measure would cost the state as much as $169-$217 billion over 12 years. Now that the proposal isn’t going to effect any time soon, Anadarko and PDC have more freedom to produce. Anadarko Petroleum Corporation (NYSEMKT:APC) was in 48 elite fund portfolios while PDC Energy Inc. (NASDAQ:PDCE) was in 15 top fund portfolios (among the around 650 elite funds we track) at the end of Q2.
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