Why These Five Stocks Are in Spotlight Today?

The US stock market further declined on Tuesday, as declining global growth continues to dent the sentiment. The International Monetary Fund’s Chief, Christine Lagarde, in a speech on Tuesday, said that the global recovery remains slow. Lack of consensus among major oil producers regarding a freeze in oil production is also inching the markets down. Among the stocks in the spotlight today are Allergan plc Ordinary Shares (NYSE:AGN), Pfizer Inc. (NYSE:PFE), Tesla Motors Inc (NASDAQ:TSLA), Sprint Corp (NYSE:S) and Amazon.com, Inc. (NASDAQ:AMZN). 

At Insider Monkey, we track around 790 hedge funds and other institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

Allergan plc Ordinary Shares (NYSE:AGN)’s stock has declined by approximately 17% following news regarding new regulations by the US treasury affecting tax inversion deals. The new rules are likely to impact the $160 billion merger of Allergan and Pfizer Inc. (NYSE:PFE) because they make it difficult for the corporations to move their headquarters to another country for tax avoidance purposes. Analysts think that the recent revision of policies by the US government might put the merger into jeopardy. However, both companies issued a joint statement and said that they are “reviewing the US Department of Treasury’s announcement,” and cannot speculate anything about the impact of the new policies on the deal before the complete review process. Pfizer Inc. (NYSE:PFE)’s stock has gained approximately 2% so far today.

Out of the funds we track, 159 funds held positions with a total value of $22.2 billion in Allergan at the end of the fourth quarter of 2015, which made it the most popular stock among the funds in our database. Pfizer also ranked among the most popular stocks with 109 funds holding around $8.6 billion worth of shares. Ken Fisher’s Fisher Asset Management is one of the most notable stakeholders in Pfizer, with an ownership of approximately 32 million shares.

Tesla Motors Inc (NASDAQ:TSLA)’s shares have tumbled by 2.1% in the morning but recovered the losses to flat in the intraday trading, after the company said on Monday that a severe shortage of parts curtailed production and sales in the first quarter. However, Tesla said that it still plans to make 80,000 to 90,000 vehicles this year. In the first quarter, the company delivered 14,820 vehicles, below the estimates of 16,000 vehicles. The news regarding the shortage of parts has raised questions about the company’s ability to handle the massive number of orders for its upcoming Model 3. Tesla is currently setting up its Gigafactory in Nevada and plans to improve and scale up its facility in Fremont, California, as well as build a factory in Europe at some point down the road. Overall, 20 hedge funds tracked by us held positions in the electric car company with a total value of $837.4 million, while the largest shareholder among them is Daniel Benton’s Andor Capital Management, which owns approximately 1 million shares of the company.

Shares of Sprint Corp (NYSE:S) have gained 1.16% this morning after the company struck a deal with Amazon.com, Inc. (NASDAQ:AMZN) which will allow Sprint customers to use Amazon Prime for an additional $10.99 per month or $132 a year. Sprint users can stream video and audio content from Amazon Prime with their existing data plans, avail Amazon shipping services and more after the deal. The latest deal has sparked criticism because of its pricing model. Many analysts think that Amazon has disrupted its own business model with this deal. Customers could purchase Amazon Prime directly from Amazon for $99 for a full year. But for Sprint users who want to use Amazon Prime with their data plan, the yearly fee comes out to be approximately $132. However, Amazon will get an opportunity to tap into a large customer base which could potentially opt for its Prime service outside Sprint. Amazon.com, Inc. (NASDAQ:AMZN)’s stock has lost 0.30% this morning.

A total of 17 hedge funds tracked by us held positions in Sprint at the end of the fourth quarter of 2015, having amassed $212.5 million worth of stock. Rob Citrone’s Discovery Capital Management owns approximately 31 million shares of the company, according to its last 13F filing. In addition, 141 funds held stakes in Amazon, with a total value of $17.3 billion. Chase Coleman’s Tiger Global Management LLC owns around 3 million shares of the ecommerce company.

Disclosure: None