The extended weekend is now over, and Wall Street is once again paying attention to the U.S. China trade war, the Indian stock market now that Modi has been reelected as well as various economic indicators. Among the stocks trending this weekend are Alibaba Group Holding Limited (NYSE:BABA), General Motors Company (NYSE:GM), Tesla Inc. (NASDAQ:TSLA), MGM Resorts International (NYSE:MGM), and AstraZeneca plc (NYSE:AZN). Let’s analyze why each stock is trending and how the smart money is positioned among them.
Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 38 percentage points since May 2014 through May 15, 2019. Our best performing hedge funds strategy also returned 26.4% year-to-date and outperformed the S&P 500 Index by nearly 12 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Alibaba Group Holding Limited (NYSE:BABA) is on watch by many traders after Reuters sources say that it plans to raise as much as $20 billion in a secondary listing in the Hong Kong exchange. (Some say the IPO might be a little bit more modest at $10-$15 billion) Alibaba originally IPOed in New York in 2014 for $25 billion. With the extra money, Alibaba could potentially invest in growth areas such as AI and the logistics. Of the around 700-740 elite funds we track, 113 funds owned $11.47 billion of Alibaba Group Holding Limited (NYSE:BABA) on December 31, versus 127 funds and $15.12 billion respectively on September 30.
General Motors Company (NYSE:GM) and Tesla Inc. (NASDAQ:TSLA) are trending after a Barron’s writer noted that Tesla cost to raise money has risen from 5.3% to potentially over 9% in terms of the bonds floating on the market. The writer also noted that the equity has been the worst performer in the NASDAQ 100 index in 2019. Demand has not met expectations, and the author, Jack Hough believes General Motors stock might be a better buy. 60 top funds had a bullish position in General Motors Company (NYSE:GM) at the end of December. Elon Musk, the ultimate smart money, is long Tesla.
MGM Resorts International (NYSE:MGM) is trending after Barron’s wrote that the stock could be an attractive gambling play. Although there are concerns about the Chinese economy and doubt over management’s ability to execute on their plan to raise profits over the next two years, MGM has a lot of positives such as activist involvement, and low investor expectations as well as more pressure on management to deliver on their goals. The number of elite funds with holdings in MGM Resorts International (NYSE:MGM) fell by 3 quarter-over-quarter to 46 at the end of December.
AstraZeneca plc (NYSE:AZN) is trending after the Wall Street Journal reported that it is prioritizing early stage cancers over more advanced cancers. If successful, the company could potentially find a competitive edge that would allow it to monetize its R&D better and also better help patients. Generally speaking, the possibility of curing cancer is higher if treated earlier.
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