Pfizer’s on a Roll, Netflix Earns the Ire of Fox, Plus 2 Other Trending Stories

Crude futures are in the green this morning after Iran said that it welcomed “any move aimed at market stability and improvement of oil prices based on justice, fairness and fair quota of all the oil producers.” In addition, the three main index futures are also higher as traders look forward to this week’s FOMC meeting.

In this article, we`ll examine five stocks that are trending, which are Twenty-First Century Fox Inc (NASDAQ:FOX), Netflix, Inc. (NASDAQ:NFLX), Pfizer Inc. (NYSE:PFE), Centurylink Inc (NYSE:CTL), and McDonald’s Corporation (NYSE:MCD), and use the latest regulatory filings to see how top hedge funds traded them in the second quarter.

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 here).

Twin Design / Shutterstock.com

Although it has long since eclipsed many traditional content producers in terms of market cap, Netflix, Inc. (NASDAQ:NFLX) is also now challenging the traditional Hollywood paradigm in terms of talent. According to the Wall Street Journal, Twenty-First Century Fox Inc (NASDAQ:FOX) sued Netflix on Friday for illegally hiring two of its top managers, saying that the internet streamer has intentionally executed a “brazen campaign to unlawfully target, recruit, and poach valuable Fox executives by illegally inducing them to break their employment contracts with Fox to work at Netflix.” Netflix has responded by saying that it does not believe Fox’s use of its fixed-term contracts in the manner used for the two executives are enforceable. Given that Netflix is getting more and more into the content game (having spent billions last year to create hit shows to retain users and attract new ones), traditional Hollywood studios will likely continue to try and make life difficult on Netflix as much as possible.

Donald Yacktman‘s Yacktman Asset Management owned over 40 million shares in Twenty-First Century Fox Inc (NASDAQ:FOX) on June 30, down by 1% from the end of March. Meanwhile, the smart money was growing a little less bullish on Netflix in terms of the number of funds in our system long the stock. Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 54 were bullish on Netflix, Inc. (NASDAQ:NFLX) at the end of June, down by ten quarter-over-quarter.

On the next page, we’ll examine the latest on Pfizer, Centurylink, and McDonald’s.

Traders are talking about Pfizer Inc. (NYSE:PFE) after the company received some positive news in recent days in terms of its pipeline. Not only did the top-line results from a Phase 3 trial of PF-06438179 come out positive, but The Committee for Medicinal Products for Human Use also recently recommended that the EMA approve Ibrance, Pfizer’s breast cancer drug. Ibrance brought in around half-a-billion dollars in sales for Pfizer last quarter. If it receives marketing approval in Europe, Ibrance’s sales will increase substantially. As for PF-06438179, many traders are optimistic on its prospects if approved. The drug is a potential biosimilar to Janssen’s Remicade, which did $6.56 billion in sales in 2015. The number of funds in our system with holdings in Pfizer Inc. (NYSE:PFE) fell by 25 during the second quarter to 94 at the end of June.

Centurylink Inc (NYSE:CTL) is in the spotlight after Bloomberg reported on Friday that the company will cut around 7%-to-8% of its labor force as it copes with the secular decline of its landline business. Given that CenturyLink has around 42,800 workers in total, the job cuts will likely affect as many as 3,400 current employees. Analysts expect CenturyLink’s sales to drop by 2% in 2016. 28 funds that we track had a long position in Centurylink Inc (NYSE:CTL) as of the most recent 13F reporting period, down by three funds from the previous one.

Although it’s not as bad as Apple Inc. (NASDAQ:AAPL)’s bill, McDonald’s Corporation (NYSE:MCD) could potentially face a back tax fee of $500 million in the EU according to recent analysis done by the Financial Times. If the EU imposes the bill and wins in the likely-subsequent appeal, McDonald’s Corporation’s operations in Europe might not be as profitable in the future as had been previously expected. Several funds in our database headed for the stock’s exits in the second quarter, as 63 funds were long McDonald’s Corporation (NYSE:MCD) at the end of June, down by 20 from the end of March.

Disclosure: None