Why Are Walt Disney Co (DIS) And Sunedison Inc (SUNE) Among Today’s Top Gainers?

After a performance on Monday, U.S. stocks have staged a strong rally this morning, as investors are positioning themselves ahead of the highly anticipated Fed meeting. In this article we’ll take a look at Freeport-McMoRan Inc (NYSE:FCX), Walt Disney Co (NYSE:DIS), Sunedison Inc (NYSE:SUNE) and UTStarcom Holdings Corp (NASDAQ:UTSI) and find out why these stocks are among today’s top gainers.

Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by more than 53 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. 48.7% gain for the S&P 500 Index (read the details). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).

Freeport-McMoRan Inc (NYSE:FCX)’s stock is having a breather today, as shares are up by roughly 2% this morning. The stock has been in a bearish trend since July of 2014, as lower prices on commodities have severly affected the company’s bottom line. Freeport-McMoRan even had to cancel its dividend after reporting negative cash flow for several quarters. The company has also been piling debt on to finance their aggressive expansion projects; their debt level has reached 2.5 times its market cap according to the third quarter financial report.

At the end of the third quarter, roughly 18% of Freeport-McMoRan Inc (NYSE:FCX)’s outstanding stock was held by 44 hedge funds, up from 41 at the end of June. Billionaire corporate raider Carl Icahn is very bullish on this stock, having initiated a massive position during the third quarter. At the end of September, Icahn Capital held 100 million shares worth approximately $969 million, by far the largest holding of this stock among the funds we follow.

The buzz generated by the imminent release of Star Wars: The Force Awakens is driving Walt Disney Co (NYSE:DIS) shares higher today. The company has also announced that it’s teaming up with Alibaba Group Holding Ltd (NYSE:BABA) to boost sales of film related toys and books in China, as well as trips to Disney’s theme parks. This move is set to complement Disney’s promotion of its Shanghai theme park, due to open in the spring of 2016. Shares are currently trading at $112.65, up by 3% from yesterday’s closing price.

The popularity of Walt Disney Co (NYSE:DIS) among the funds we follow took a serious hit during the third quarter, as the number of funds invested fell to 48 from 60 a quarter earlier. Alex Snow was among those that remained loyal to the iconic filmmaker, upping his stake by 5% during the quarter. In its latest 13F filing, Snow’s Lansdowne Partners reported ownership of 8.68 million shares worth in the region of $887 million.

Sunedison Inc (NYSE:SUNE)’s shareholders are all smiles this morning, as the stock has surged by as much as 12% during the first hours of trading after the company announced a deal with Ontario’s Independent Electricity System Operator to supply 5 MW/20 MWh of energy storage. The stock has recently received some positive reviews from analysts at Deutsche Bank and Bank of America, who reiterated their ‘Buy’ ratings last Thursday. Deutsche Bank set a price target of $9 per share, while analysts at BofA have reduced their expectations to $12 per share, from the previous target of $15 per share.

Sunedison Inc (NYSE:SUNE)’s appeal to hedge fund managers cooled off during the quarter, with the number of long positions decreasing to 73 from 93 at the end of June. David Gallo seems to be confident the stock is poised for a rally and has used the opportunity to load up on a dip. His fund, Valinor Management, reportedly holds 15.6 million shares, up by 231% from the end of June, valued at $111 million.

Shares of UTStarcom Holdings Corp (NASDAQ: UTSI) jumped by as much as 28% this morning, leading the solid advance of wireless communications stocks. The company has a market cap of $77.5 million and does not pay a dividend. UTStarcom’s third-quarter results were disappointing, as revenues fell by 15% year over year to $26.8 million. The company also posted a loss of $5.1 million, the equivalent of a loss of $0.13 per share when adjusted for stock option expenses.

At the end of September only two of the funds we follow had UTStarcom Holdings Corp (NASDAQ:UTSI) in their equity portfolio, down from four at the end of the second quarter. Still, these funds control roughly 30% of the company’s common shares. Himanshu H. Shah is betting heavily on this stock, having pledged more than a quarter of his portfolio to this position. According to its latest 13F filing, Shah Capital Management holds 10.6 million shares of UTSI, valued at $25.8 million.

Disclosure: none