Why Tesla, Williams Companies, and Three More Are in the Spotlight

Many investors are on edge after Friday’s poor price action. Although the S&P 500 is still well in the green year-to-date, there is more fear creeping into the markets than usual of late.

Among the stocks that are capturing investors’ interest today are four technology companies and one energy company. Let’s take a closer look at latest news concerning Tesla Motors Inc (NASDAQ:TSLA), Williams Companies Inc (NYSE:WMB), Texas Instruments Incorporated (NASDAQ:TXN), NXP Semiconductors NV (NASDAQ:NXPI), and Analog Devices, Inc. (NASDAQ:ADI) and see how successful hedge funds traded the five stocks in the second quarter.

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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Investors are buzzing about Tesla Motors Inc (NASDAQ:TSLA) after CEO Elon Musk said that the company will roll out an autopilot software update within a few weeks to make the feature safer. Given that Tesla’s vehicles are already some of the safest vehicles on the road today, the software update will make Tesla even more attractive for potential car buyers. According to Musk, the new Autopilot would have been able to avoid the accident in May that killed a Tesla driver in which the car’s autopilot basically missed seeing a semi-truck’s trailer due to its white paint and the bright sky. Tesla needs sentiment around its stock to be positive to raise additional equity capital this year to meet its ambitious growth goals. According to our database of 749 13F-filing hedge funds, 36 had a long position in Tesla Motors Inc (NASDAQ:TSLA) at the end of the second quarter, down by three funds from the end of the previous quarter.

Williams Companies Inc (NYSE:WMB) is trending after Keith Meister of Corvex Capital said that he will publish a letter as soon as today asking three of Williams’ recently-installed Board members to consider forming their own strategic review committee. Meister made the comments after Enterprise Products Partners L.P. (NYSE:EPD) said on September 8 that it is no longer interested in merging with Williams after the company’s management was rather unresponsive (the official words were: ‘lack of engagement by Williams’) among other factors. Meister doesn’t think Williams’ Board gave the potential merger its full consideration and likely wants Williams to consider selling itself/merging with Enterprise or another pipeline to unlock synergies. Meister said:

“I’m going to reach out to the three new directors to beg for help on behalf of all shareholders, urging them to get informed to go meet with shareholders do a roadshow, hear their opinions and get their own investment bankers and meet with those investment bankers with no management present. They should form their own strategic review committee.”

Eric W. Mandelblatt‘s Soroban Capital Partners owned 21 million shares of Williams Companies Inc (NYSE:WMB) at the end of June.

On the next page, we’ll examine the event that has caused Texas Instruments, NXP Semiconductors, and Analog Devices to trend.

Texas Instruments Incorporated (NASDAQ:TXN), NXP Semiconductors NV (NASDAQ:NXPI), and Analog Devices, Inc. (NASDAQ:ADI) are each in the spotlight after Barron’s published a bullish article on the three. In the column, author Tiernan Ray says that the three companies have considerable upside as investors focus on innovation rather than dividends and M&A. Ray thinks that, as interest rates normalize, investors will pay closer attention to the company’s R&D pipeline and products rather than the current focus on mostly financial metrics.

The author notes that Analog Devices’ micro-electro-mechanical devices, for example, could eventually be used for broader purposes that could increase the company’s profit down the road. Similarly NXP’s R&D on new chips could eventually help MRI scanners be more precise and reliable.

Of the funds in our database, 31 were bullish on Texas Instruments Incorporated (NASDAQ:TXN) at the end of June, owning just 1.10% of its float. Meanwhile 57 funds owned shares of NXP Semiconductors NV (NASDAQ:NXPI) and 26 funds were long Analog Devices, Inc. (NASDAQ:ADI) as of the same date.

Disclosure: None