Why Chipotle (CMG), Advanced Micro Devices (AMD), and 3 Other Stocks Are Trending

After an eventful Tuesday in terms of meaningful M&A activity, two bold hedge fund managers are making waves, one by buying a big stake in a struggling restaurant chain, the other for buying up an entire corporation.

In this hedge-fund-titan-heavy edition of pre-market movers, we’ll take a look at why five stocks, Chipotle Mexican Grill, Inc. (NYSE:CMG), Advanced Micro Devices, Inc. (NASDAQ:AMD), Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY), Icahn Enterprises LP (NASDAQ:IEP), and Federal-Mogul Holdings Corp (NASDAQ:FDML) are each in the spotlight today. We’ll also use the latest 13F data to determine how hedge funds are positioned in each stock.

Our research 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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Ackman Orders a Big Stake of Chipotle 

Chipotle Mexican Grill, Inc. (NYSE:CMG) is in the spotlight today after hedge fund superstar Bill Ackman of Pershing Square disclosed a 2.88-million-share stake in the burrito chain. Those 2.88+ million shares equate to 9.9% of Chipotle Mexican Grill, Inc. (NYSE:CMG)’s float. According to the filing, Ackman believes Chipotle is undervalued and he intends “to engage in discussions with the Issuer and Issuer’s management and board of directors, other stockholders of the Issuer and other interested parties that may relate to the governance and board composition, business, operations, cost structure, management, assets, capitalization, financial condition, strategic plans, and the future of the Issuer.” We covered the filing in greater detail last night.

AMD Raises Money

Perhaps taking advantage of the huge run-up in its stock price this year, Advanced Micro Devices, Inc. (NASDAQ:AMD) announced plans on Tuesday to raise $600 million in equity and $450 million in convertible senior notes due 2026. The company plans to use the proceeds to purchase up to $1.02 billion in senior notes and to repay up to $226 million in borrowings. Of the 749 hedge funds that we track which filed 13F’s for the June quarter, 25 had a long position in Advanced Micro Devices, Inc. (NASDAQ:AMD) at the end of June, up by 12 from the end of the previous quarter.

On the next page we’ll find out why Dave & Buster’s Entertainment, Icahn Enterprises LP, and Federal-Mogul Holdings have investors buzzing.

Traders are watching Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) today after the company reported second quarter earnings of $0.50 per share on revenue of $244.3 million. Although the results handily beat analysts’ estimates by $0.06 per share and $1.16 million, shares of Dave & Buster’s are in the red, as the market was evidently expecting better numbers. Among the issues that might have led buyers to stay away was the company’s full-year guidance of $983 million-to-$995 million in sales and adjusted EBITDA of $254 million-to-$260 million. The number of hedge funds in our system with holdings in Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) rose by one quarter-over-quarter to 27 at the end of June.

Federal-Mogul Sells Itself

The M&A craze that began last weekend is still alive and well, as Federal-Mogul Holdings Corp (NASDAQ:FDML) has entered into a merger agreement with a subsidiary of Icahn Enterprises LP (NASDAQ:IEP). According to the deal’s terms, Icahn Enterprises will offer to buy all the stock it doesn’t already own of Federal-Mogul for $9.25 per share in cash. Icahn Enterprises previously offered $7 per share in February before upping it to $8 per share in June. The merger agreement has been approved by the Boards of both companies.

Carl Icahn‘s Icahn Capital owned 138.6 million shares of Federal-Mogul and 123.5 million shares of Icahn Enterprises at the end of the second quarter.

Disclosure: None