Nintendo, Shell, MSG, and 2 Other Stocks Have Investors Talking This Morning

Crude futures are once again in the red this morning, as traders remain in risk-off mode despite this weekend’s botched coup attempt in Turkey. Among the stocks buzzing to kick off the new trading week are Royal Dutch Shell plc (ADR) (NYSE:RDS.A), Madison Square Garden Co (NYSE:MSG), Ferro Corporation (NYSE:FOE), Ocean Power Technologies Inc (NASDAQ:OPTT), and Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY). Let’s find out why each stock is in the spotlight and examine how elite funds are playing each of them.

At Insider Monkey, we track around 765 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).

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Barron’s Likes Royal Dutch Shell 

Financial magazine Barron’s published a bullish article on Royal Dutch Shell plc (ADR) (NYSE:RDS.A) on Saturday, stating that Shell is the best “big oil stock for investors” and that the company’s initiatives could send shares up by 20% or more even if oil prices stay flat. In the article, Barron’s writer Jack Hough notes that Shell’s cost cuts and divestments have increased confidence in Shell’s juicy 6.6% dividend yield. Mr. Hough also notes that Shell management has increased its capital discipline and that the stock trades for a low enough valuation to justify the risk of weak oil prices. It remains to be seen whether Shell will benefit from the Barron’s bounce, however, as shares of the energy giant are in the red in the pre-market. Ken Fisher‘s Fisher Asset Management was one of the shareholders of Royal Dutch Shell plc (ADR) (NYSE:RDS.A) at the end of June, owning 119,090 shares.

Bullish Write-up for Madison Square Garden 

Madison Square Garden Co (NYSE:MSG) is in the spotlight today after Barron’s published a column entitled ‘MSG: Trophy Properties for 35% Off’. In the column, writer Andrew Bary notes that the holding company/conglomerate looks sharply undervalued given its approximately $60 in cash per share, no debt, and ownership of the New York Rangers, New York Knicks and various real estate. Mr. Bary also notes that Madison Square Garden is expected to have free cash flow of around $100 million for the current fiscal year ending June 30, 2017 and that the company has a $525 million share buyback program, of which only $78 million has been used. If the Dolan family chooses to unlock the latent value in Madison Square Garden someday, investors will benefit greatly. Of the 766 elite funds that we track, 31 funds owned $779.36 million worth of Madison Square Garden Co (NYSE:MSG) shares on March 31, which accounted for 19% of the float. Shares are up by 2.6% in pre-market trading.

On the next page we examine what’s happening with Ferro Corporation, Ocean Power Technologies, Nintendo, and those companies’ shares.

Ferro Rejects Low Bids

Ferro Corporation (NYSE:FOE) is in the spotlight today after Reuters reported that the chemical company rejected the acquisition offers from private equity firms Apollo Global and CVC Capital Partners for being too low. According to the article, the all-cash acquisition offers were below the company’s current stock price of around $14 per share. 22 funds in our system had a long position in Ferro Corporation (NYSE:FOE) at the end of March, down by three funds from the end of December.

Ocean Power Reports Earnings

After surging sharply over the past few trading days, including by 75% on Friday alone, Ocean Power Technologies Inc (NASDAQ:OPTT) shares are 16% in the red this pre-market after the company reported a fourth quarter of fiscal year 2016 loss of $2.08 per share on revenue of $0.1 million. In addition, the company disclosed that it received a second subpoena from the SEC on July 12, 2016, requesting information related to the company’s April 4, 2014 public offering. Management is cooperating with the SEC on the investigation. The number of funds that we track which had holdings in Ocean Power Technologies Inc (NASDAQ:OPTT) stood at two as of the end of March.

Pokemon Go to Expand to 26 Markets

Traders are watching Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) today after the company launched the mega-hit augmented reality game Pokemon Go in 26 countries over the weekend. Even though Pokemon Go has been a smash hit in the United States, Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) has held back on officially launching the game in many other markets, including its home territory of Japan, because the game’s popularity has overloaded its servers and caused significant game play interruptions. Although Nintendo’s servers are still overloaded and there are still crashes, the launch of Pokemon Go in 26 other markets is a good sign that the company is learning to adapt to the large demand for the game. If the success of Pokemon Go is sustainable and the game doesn’t end up being a fad, Nintendo will benefit substantially from its massive and thus far completely smitten userbase.

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