Upgrades, Downgrades, & Restructuring, Oh My!: Why Investors Are Buzzing About These 5 Stocks

After three days of advances and new record highs, U.S stocks appear likely to take a breather today. After the short selloff triggered by the British referendum vote to ditch the European Union, stocks have rallied by roughly 7.5% and investors appear to be quite enthusiastic ahead of the earnings season. In this article we’ll take a look at five stocks that have traders in a tizzy today, for various reasons. We’ll also examine hedge fund sentiment towards these stocks, among the select group of hedge funds that we track in our database.

Hedge fund sentiment is an important metric for assessing long-term profitability. At Insider Monkey, we track over 765 hedge funds, whose quarterly 13F filings we analyze to 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 (read more details here).

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Strong Air Traffic Growth for Jetblue

JetBlue Airways Corporation (NASDAQ:JBLU) is trending higher this morning, after the company presented preliminary traffic results for the month of June. The company said traffic increased by 11.6% compared to June 2015, while capacity jumped by 10.5% year-over-year. JetBlue Airways Corporation (NASDAQ:JBLU) also said that its preliminary revenue per available seat mile fell by approximately 4.5% year-over-year. Shares have opened 3.9% higher and are currently trading at $18.60 apiece. Hedge fund interest in JetBlue Airways Corporation (NASDAQ:JBLU) decreased significantly during the first quarter, with the number of long positions in the stock held by funds in our system having dropped to 29 from 38 quarter-over-quarter.

Tough Times Ahead for Metlife

Metlife Inc (NYSE:MET) has been downgraded by analysts at Deutsche Bank, to ‘Hold’ from the previous ‘Buy’ rating. The firm said it sees “no short-term catalysts” and fears the low yield on Treasuries will have a negative impact. Analysts have also noted that Metlife Inc (NYSE:MET)’s plan to divest some of its U.S retail portfolio is “clear long-term positive,” but they believe this will not happen before the end of the year, so investors should not be expecting buybacks before 2017. Deutsche Bank has also reduced its price target to $44 per share, from the previous target of $47 per share. The stock opened lower and quickly started marching south, with it currently down by 1.5% from yesterday’s closing price.

Metlife Inc (NYSE:MET) received a boost in popularity among the funds in Insider Monkey’s database during the first quarter, with 50 of them having reported a stake in the company as of the end of March, up from 41 registered as of December 31.

Head to the next page to read about two companies that face big changes in the near future as well as the latest on the jewelry and luxury goods industry.

Time Inc Appoints New Chief Content Officer

The long-awaited restructuring of Time Inc (NYSE:TIME) might finally be here. It’s been reported that Fortune editor Alan Murray will be named as the publisher’s new Chief Content Officer, replacing Norm Pearlstine, who will step down and become Time Inc (NYSE:TIME) CEO Joe Ripp’s consultant on international affairs. There is also expected to be some downsizing, though it has yet to be announced. The company recently announced plans to shift its strategy towards digital content and social media, hoping to boost revenue by 1%-to-5% in 2016. Although Time Inc shares opened higher this morning, the stock could not hold on to the gains and has dipped slightly into the red. Hedge fund interest in Time Inc (NYSE:TIME) inched up during the first quarter, reaching 21 long positions among the funds in our system, up from 19 registered three months earlier.

Weak Demand For Luxury Goods

News from across the Atlantic could spell trouble for U.S luxury brands, including Tiffany & Co. (NYSE:TIF). London luxury fashion house Burberry said that it experienced a fall in comparable-store sales for the second quarter. Burberry also said that it continued to see “uneven demand” in the U.S and that tourist spending remained low. In other Tiffany-related news, the Royal Bank of Canada issued an update on Tiffany & Co. (NYSE:TIF)’s stock, lowering its price target on it to $65 per share from $68, while reiterating its ‘Sector Perform’ rating. This implies a mere 3.7% upside potential from yesterday’s closing price. At the end of March, approximately 4% of Tiffany & Co. (NYSE:TIF)’s common stock was held by 26 hedge funds in our database.

Analysts Talk Williams Companies

Williams Companies Inc (NYSE:WMB) is also making headlines today. Analysts at Goldman Sachs have restated their ‘Buy’ rating on the stock and their price target of $25 per share, suggesting upside potential of 14% from yesterday’s close. Morgan Stanley has also re-initiated covered on the stock with an ‘Equal Weight’ rating and $24 price target. After the proposed merger between Williams Companies Inc (NYSE:WMB) and Energy Transfer Equity LP (NYSE:ETE), half of the Williams Board resigned, including activist investors Eric W. Mandelblatt and Keith Meister, whose funds collectively hold 8.4% of Williams’ stock. None of them, however, sold their stakes in the company and their comments hint at the possibility of a proxy fight to wipe out the entire board now that the merger has fallen through. It is yet unclear when the board will face election.

The popularity of Williams Companies Inc (NYSE:WMB) among the funds we follow took a hit during the first quarter, with the number of long positions dropping to 52 from 59. Together these funds held approximately 19% of the company’s common stock.

Disclosure: None