What’s the Deal With These 5 Heavily Traded Stocks Today?

It’s a tech-heavy edition of trending stocks, as big tech companies Amazon.com, Inc. (NASDAQ:AMZN), Facebook Inc (NASDAQ:FB), and Apple Inc. (NASDAQ:AAPL), and medium-sized ones, Polycom Inc (NASDAQ:PLCM) and Mitel Networks Corp (NASDAQ:MITL) are each trending for various reasons and making moves on high trading volume. Let’s find out what is causing investors to buy or sell each stock and then analyze what the smart money thinks of each of them.

At Insider Monkey, we track around 785 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).

Amazon.com, Inc. (NASDAQ:AMZN) shares are 1.5% in the green today after multiple industry sources indicated that the company will introduce a new Kindle e-reader with a unique rechargeable protective case to extend battery life next week. The Kindle has been a major success for Amazon and is currently in its seventh generation. We’re not sure of its exact financial success however, as Amazon hasn’t provided much in the way of concrete financial details. In related news, Bloomberg reports that Amazon acquired an artificial intelligence startup, Orbeus Inc, in the fall of 2015. Amazon has made heavy investments in robotics, drones, and now AI, to improve the efficiency of its distribution centers and delivery methods. Many hedge funds continue to view Amazon.com, Inc. (NASDAQ:AMZN) as a must-hold, with our data showing that 141 elite funds in our system owned over $17.3 billion worth of Amazon shares at the end of December. That compares to 113 elite funds and $14.98 billion in holdings at the end of September. Andreas Halvorsen‘s Viking Global owned 2.57 million Amazon shares at the end of December.

Social media giant Facebook Inc (NASDAQ:FB) is trending after Jan Koum, the founder of WhatsApp and the unit’s CEO, announced that the messaging app is now fully encrypted. The encryption means that the app’s messages are likely unreadable to anyone besides their intended receivers. Given that WhatsApp is used by around one billion people monthly, the news is certainty a win for privacy advocates, although authorities such as the FBI might be shaking their heads. WhatsApp was bought by Facebook Inc (NASDAQ:FB) for around $22 billion in a deal that closed in 2014. The messaging app has substantial potential given its user engagement.

Within our database, many hedge funds think Facebook also has a lot of potential, with 146 elite funds holding shares of the company at the end of 2015. That makes Facebook the third-most widely held stock among the select group of hedgies that we follow. Shares of the company are up by 1% in afternoon trading.

On the next page, we examine the latest regarding Apple Inc, Polycom Inc, and Mitel Networks Corp.

The experts are starting to turn more bullish on smartphone giant Apple Inc. (NASDAQ:AAPL), whose stock is up by a modest 0.4% in afternoon trading. Analysts at Needham initiated coverage on the tech giant with a rating of ‘Strong Buy’ and a $150 price target, suggesting that shares of the company have 36% upside from present levels. The Needham analysts like how Apple dominates the wealthiest segment of the smartphone market and feel the company has pricing power. Our data shows that many investors agree with Needham’s bullish sentiment. 133 elite funds held $17.7 billion worth of Apple Inc. (NASDAQ:AAPL) shares on December 31. That’s pretty much unchanged from 133 funds with $17.4 billion in shares at the end of September.

Polycom Inc (NASDAQ:PLCM) and Mitel Networks Corp (NASDAQ:MITL) are up by 8% and 4% respectively on strong volume on the back of a Bloomberg report stating that the two are in advanced merger talks. According to people with knowledge of the deal, Mitel could potentially buy Polycom for $12.50 per share in stock plus cash, valuing Polycom at around $1.7 billion. The merger would be a win for both companies, giving them greater efficiencies from larger scale. An announcement of the merger could come as early as next week, although there is no guarantee of a deal. 18 elite funds owned 21.7% of Polycom Inc (NASDAQ:PLCM)’s shares at the end of 2015, while nine elite funds owned 12.6% of Mitel Networks Corp (NASDAQ:MITL)’s shares at the end of December. Among the shareholders of both companies is Paul Singer‘s Elliott Management, which asked the two companies to make just such a combination.

Disclosure: None