Tesla, TerraForm, and Johnson & Johnson Among the Biggest Weekend Newsmakers

With another quarter almost in the rear-view mirror, many investors are adjusting their portfolios in reaction to the latest news. Of all the potential headlines this week, none is more important than the Fed’s interest rate decision on September 20-21. Rest assured, Insider Monkey will be covering the Fed news and all the associated smart money commentary stemming from it the moment it happens.

In the meantime, let’s take a closer look at five stocks that are making some waves this weekend, which are Johnson & Johnson (NYSE:JNJ), Abbott Laboratories (NYSE:ABT), TerraForm Global Inc (NASDAQ:GLBL), Tesla Motors Inc (NASDAQ:TSLA), and Mobileye NV (NYSE:MBLY). We’ll also use the latest regulatory filing data to see how the smart money is positioned in the five equities.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 750 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, 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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M&A in the drug sector is alive and well, as Johnson & Johnson (NYSE:JNJ) recently agreed to buy Abbott Medical Optics from Abbott Laboratories (NYSE:ABT) for $4.325 billion in cash. The acquired division, which produces ophthalmic products for cataract surgery, laser refractive surgery, and consumer eye health, brought in around $1.1 billion in revenue in 2015. Company Group Chairman Ashley McEvoy said:

“With the acquisition of Abbott Medical Optics’ strong and differentiated surgical ophthalmic portfolio, coupled with our world-leading ACUVUE® contact lens business, we will become a more broad-based leader in vision care. Importantly, with this acquisition we will enter cataract surgery – one of the most commonly performed surgeries and the number one cause of preventable blindness.”

The transaction is expected to close in the first quarter of 2017 and would be modestly accretive to adjusted EPS immediately. Ken Fisher‘s Fisher Asset Management reported holding a stake of over 10.8 million shares in Johnson & Johnson (NYSE:JNJ) as of the end of the second quarter, 1% smaller than the number of shares it held the end of the first quarter.

Meanwhile, the smart money tracked by Insider Monkey was growing more optimistic on Abbott from March 31 to June 30. According to our data from 749 13F-filing hedge funds, 47 had a long position in Abbott Laboratories (NYSE:ABT) at the end of the second quarter, up by five quarter-over-quarter.

Traders are talking about TerraForm Global Inc (NASDAQ:GLBL) after the company provided its preliminary fiscal second quarter 2016 results. For the time period, the company sees production of 605 GWh, revenue of $52 million-to-$56 million, adjusted EBITDA of $40 million-to-$46 million and CAFD of $18 million-to-$24 million. Not many funds in our system were long TerraForm Global at the end of the second quarter, as just 16 owned shares of TerraForm Global Inc (NASDAQ:GLBL) at the end of June, down by seven funds from the end of March.

On the next page, we’ll take a closer look at the latest in the ongoing spat between Tesla and Mobileye.

The back-and-forth between Tesla Motors Inc (NASDAQ:TSLA) and Mobileye NV (NYSE:MBLY) is still ongoing, this time with the latter refuting Tesla’s claim that Mobileye was trying to stop Tesla’s internet computer vision efforts. Mobileye further added the following interesting tidbit:

“In communications dating back to May 2015 between Mobileye (MBLY) Chairman and Tesla’s CEO, Mobileye expressed safety concerns regarding the use of Autopilot hands-free. After a subsequent face to face meeting, Tesla’s CEO confirmed that activation of Autopilot would be “hands on.” Despite this confirmation, Autopilot was rolled out in late 2015 with a hands-free activation mode.”

It has become increasingly clear that Mobileye and Tesla are now competitors rather than partners. Tesla has been blamed before for adopting autonomous technology too early, and it is in Mobileye’s best interest to keep that issue in the spotlight as long as possible. On the other hand, Tesla would surely like the issue to fade away sooner than later, as negative sentiment hovering over the company could impact Tesla’s ability to raise maximum funds from a secondary offering that Tesla has hinted at executing before the end of this year. 25  funds that we track were bullish on Mobileye NV (NYSE:MBLY) at the end of June, while 36 owned shares of Tesla Motors Inc (NASDAQ:TSLA).

Disclosure: None