Why Apple, Chipotle, and 3 Energy Stocks Are Turning Heads Today

The bulls are retreating today after the IEA said that demand for crude might be weaker-than-expected. If demand for crude is weaker, global growth could be softer, and the earnings growth baked in for many stocks might not pan out in the short-term; or at least that appears to be the view of many traders today.

Among the stocks showing more volatility than the three indexes are Apple Inc. (NASDAQ:AAPL), Chipotle Mexican Grill, Inc. (NYSE:CMG), SM Energy Co (NYSE:SM), Continental Resources, Inc. (NYSE:CLR), and Noble Energy, Inc. (NYSE:NBL). Let’s take a closer look at how traders are buying and selling these stocks today and check in on how hedge funds traded them in the second quarter to see what the smart money thinks.

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).

Ellica / Shutterstock.com

Apple Inc. (NASDAQ:AAPL) is one of the rare bright spots in many investors’ portfolios today, as shares of the tech company are up by 2.88% at a time when the broader market is in the red. Apple’s relative strength is due to various telecoms such as Sprint Corp (NYSE:S) and T-Mobile US Inc (NASDAQ:TMUS) saying that demand for the iPhone 7 and iPhone 7 Plus has been strong. In terms of specifics, iPhone pre-orders increased by 375% for the first three days of reservation availability at Sprint, and order volume at T-Mobile was almost four-times higher from Friday through Monday compared to the next-most popular iPhone. David Einhorn‘s Greenlight Capital owned more than 6.8 million shares in Apple Inc. (NASDAQ:AAPL) at the end of June, 17% fewer than it did at the end of March.

Chipotle Mexican Grill, Inc. (NYSE:CMG) shares are off by 2% after the research firm M Science said that the burrito chain’s Chiptopia event didn’t move same-store sales very much. The event’s inability to restore same-store sales means that the company will likely have to work harder/wait longer to regain the trust of its customers. Restaurant analyst Howard Penney had previously referred to the Chiptopia event as a “joke”.

Also likely playing a part in the stock’s weakness today is the broader market sell-off, as the S&P 500 is off by 1.5%. Over the medium-term, analysts at Citigroup are somewhat more optimistic than the market, as they raised their price target on Chipotle to $517 per share from $488 today. Bill Ackman‘s Pershing Square owns 9.9% of Chipotle Mexican Grill, Inc. (NYSE:CMG) according to his recent 13D filing on the company.

On the next page, we’ll examine why SM Energy, Continental Resources, and Noble Energy are each in the red this morning.

Energy stocks SM Energy Co (NYSE:SM), Continental Resources, Inc. (NYSE:CLR), and Noble Energy, Inc. (NYSE:NBL) are each deep in the red today after the IEA published a weaker-than-expected assessment on near-term demand. In terms of specifics, the group said that “global demand growth is slowing at a faster pace than the group initially predicted,” due in part to the “recent pillars of demand growth — China and India” being wobbly. Although the agency maintained its 2017 demand growth estimate of 1.2 million barrels per day, it cut its 2016 demand growth estimate to 1.3 million barrels per day, down from the previous estimate of 1.4 million barrels per day.

Due to the gloomy outlook, crude futures are off by around 2.6% this morning. Lower crude futures prices mean less realized revenue for the un-hedged part of each E&P’s production.

Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 20 were long SM Energy Co (NYSE:SM) on June 30, while 36 owned shares of Noble Energy, Inc. (NYSE:NBL), and 44 were long Continental Resources, Inc. (NYSE:CLR).

Disclosure: None