Why Alphabet, Seadrill, Freeport-McMoRan and Two More Stocks Are Buzzing

On the last trading day of the week, crude futures are red-hot while the three major indexes have slid since the opening bell. Although the market and crude have been correlated in the past, the correlation between the two seem to be breaking down over the recent week.

Among the stocks that traders are watching today are Alphabet Inc (NASDAQ:GOOGL), Gap Inc (NYSE:GPS), Freeport-McMoRan Inc (NYSE:FCX), Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR), and Seadrill Ltd (NYSE:SDRL). Let’s find out why traders are talking about each stock and see what elite funds think of the five.

While there are many metrics that investors can assess in the investment process, the hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details here).

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Alphabet Down on Cautious Commentary

Alphabet Inc (NASDAQ:GOOGL) shares are lower today after analysts at Citigroup commented that search spending growth has slowed recently. Although Alphabet has many other products, including YouTube, Fiber, and Android, search is, nevertheless, Alphabet’s main source of income. If spending on search slows down, Alphabet’s earnings results for the current quarter might not meet expectations. Although analysts at Citigroup made those comments, they have not changed their ‘Buy’ rating or $900 price target on the stock yet. Andreas Halvorsen’s Viking Global owned over 2.0 million shares of Alphabet Inc (NASDAQ:GOOGL)’s class A stock at the end of March.

Technical Trading Detected at Gap 

Although its same-store sales may be weak, Gap Inc (NYSE:GPS)’s shares certainly haven’t been over the past month. Shares of the fashion retailer are up by 3.5% today as technical traders buy in the hopes that the stock’s recent momentum will continue. Potentially also contributing to the buying is the prospect of several investor presentations by peers this month that could improve sentiment in the sector. Dividend investors could also be buying given the stock’s 4.7% dividend yield and 46% payout ratio. Gap’s management will need to turn around the same store sales for the stock to do well in the long run, however. A total of 23 funds from our database were long Gap Inc (NYSE:GPS) at the end of March, up by six funds from the previous quarter.

On the next page, we examine Freeport-McMoRan, Petroleo Brasileiro SA Petrobras, and Seadrill Ltd.

Rising Crude Futures Power Up Energy Related Names

Freeport-McMoRan Inc (NYSE:FCX), Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR), and Seadrill Ltd (NYSE:SDRL) are up by 5%, 7%, and 9%, respectively on the back of stronger crude prices. Although crude futures sold off earlier in the week due to concerns that a ‘Brexit’ might cause the European economy to slide into recession and the dollar to strengthen, fears over the event have dropped today due to the death of a British pro-EU politician, Jo Cox. Cox, who was killed by a 52 year-old pro-Brexit man who had ties to far-right organizations. The death of Cox has caused sentiment for remaining in the EU to strengthen inside Britain. The lower probability of a Brexit has caused crude prices to rally, and the rising crude prices have powered Freeport-McMoRan, Petrobras, and Seadrill higher.

Among the funds we track, Freeport-McMoRan Inc (NYSE:FCX) was the most popular with 34 funds holding shares at the end of March. Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) was next with 23 funds long the stock, and Seadrill Ltd (NYSE:SDRL) wasn’t too far behind with 22 savvy funds holding shares as of the end of March.

Disclosure: none