Why These Five Stocks Opened to Big Gains This Morning

On Wednesday, the U.S stock market is trading in green territory, as investors await news of Fed Chair Janet Yellen’s testimony regarding monetary policy. In this article, we’ll take a look at some of the stocks that are in the spotlight and pushing the markets higher this morning, which includes Deutsche Bank AG (USA) (NYSE:DB), Staples, Inc. (NASDAQ:SPLS), Office Depot Inc (NASDAQ:ODP), CONSOL Energy Inc. (NYSE:CNX), Akamai Technologies, Inc. (NASDAQ:AKAM), and Hess Corp. (NYSE:HES). Aside from the news that are sending this stocks higher, we are also going to assess the hedge fund sentiment towards these stocks.

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see more details here).

First up is Deutsche Bank AG (USA) (NYSE:DB), whose stock is up by 4.5% in this morning after the Financial Times reported that the investment bank is considering a potential buyback of its debt. More specifically, the buyback includes senior bonds with a value of €50 billion ($56.08 billion) as of September 2015, but it doesn’t include the contingent convertible bonds. Moreover, analysts at DZ Bank AG reiterated their ‘Buy’ rating on Deutsche Bank today.

During the third quarter, Deutsche Bank AG (USA) (NYSE:DB) registered a decrease in popularity among the funds that we track, with eight investors holding long positions at the end of September, while 12 funds were long at the end of June. Crispin Odey’s Odey Asset Management Group was the largest shareholder of the stock in our database, reporting ownership of 2.58 million shares in its latest 13F filing.

Let’s move on to Staples, Inc. (NASDAQ:SPLS), whose shares are rallying by 2% after European regulators approved its acquisition of Office Depot Inc (NASDAQ:ODP), whose shares are likewise up by 3% this morning. The merger, valued at $6.3 billion, has a particular condition in which the former has to sell some of its European business and all of its operations in Sweden. The deal still faces regulatory hurdles in the United States and Canada, so the news today is nonetheless good.

54 investors that we track were long Staples, Inc. (NASDAQ:SPLS) at the end of September, amassing around 17.7% of its outstanding stock. Richard S. Pzena‘ Pzena Investment Management reported holding a $299.11 million position in the stock as of that time, comprising 1.9% of its 13F portfolio. In Office Depot Inc (NASDAQ:ODP)’s case, 47 funds were long the stock at the end of the third quarter, down from 49 funds quarter-over-quarter. Among the big believers was Jeffrey Smith‘s Starboard Value LP, which pushed for the merger of the two companies. Starboard held 44.74 million Office Depot shares at the end of September.

Next on our list is CONSOL Energy Inc. (NYSE:CNX), whose shares are up by 5.5% in the first hours of trading today after the U.S Supreme Court ruled against President Barack Obama’s plan to force cuts in carbon dioxide emissions at coal-fired power plants, the centerpiece of the President’s strategy to combat climate change. The ruling was split along party lines, as all four liberal justices voted against the motion, being defeated 5-4. The ruling grants a temporary reprieve for energy companies before the Supreme Court hears the case on June 2.

Among the funds that we follow, 25 reported long positions in CONSOL Energy Inc. (NYSE:CNX) as of the end of September, up by two funds from a quarter earlier. Mason Hawkins‘ Southeastern Asset Management was the largest shareholder of CONSOL Energy Inc. (NYSE:CNX) in our system, with 46.39 million shares valued at $454.7 million at the end of September.

Akamai Technologies and Hess Corp are two of the day’s trending stocks and we check out why on the following page.

Akamai Technologies, Inc. (NASDAQ:AKAM)’s shares are rallying by more than 20% today, on the back of the company releasing its financial results for the fourth quarter and year ended December 31, 2015.  For the quarter, the company reported EPS of $0.72 on revenue of $579.16 million, beating EPS expectations by $0.10 and revenue estimates by $10.44 million. Akamai’s guidance for the first quarter was also slightly better-than-expected. The company anticipates revenue of between $554 million and $570 million and EPS in the range of $0.61 to $0.64, while analysts were estimating $567.1 million in revenue and earnings of $0.61 per share. Moreover, the company announced a $1 billion buyback authorization valid through December 31, 2018. Consequently, Craig Hallum and B. Riley are both more bullish on Akamai today, as they upgraded the company to a ‘Buy’ rating. On the other hand, analysts at Deutsche Bank, JPMorgan Chase, and FBR & Co. all lowered their price targets on the stock, to $75, $60 and $42, respectively.

Akamai Technologies, Inc. (NASDAQ:AKAM) lost popularity in the third quarter of 2015, as out of the 730 funds that we track, 37 funds held shares of the company on September 30, accounting for 7.8% of the float, down from 39 funds on June 30. Clifton S. Robbins‘ Blue Harbour Group was the largest shareholder of Akamai Technologies in our system, holding a $256.9 million position at the end of September.

Lastly, shares of Hess Corp. (NYSE:HES) are up by 3% after Goldman Sachs upgraded the company to “Conviction Buy” from “Neutral”, along with a price target of $59, suggesting the stock has 52.5% upside potential from its close yesterday. The bank highlighted the exploration and production company’s opportunities among its peers in Guyana and the Gulf of Mexico. Paul Singer‘s Elliott Management was the largest shareholder of Hess Corp in our database as of September 30, with 17.80 million shares valued at $891.1 million.

Disclosure: None