Wednesday, May 30, 2012

Are these Hedge Fund Darlings Really a Good Buy?

In yesterday’s article, I mentioned the recent study by Goldman Sachs, which listed the most popular stocks held by hedge funds. I’ve already shared with you the names of the 13 stocks that, technically, look the most promising out of the 50 most popular companies held by hedge funds.

Today, I want to talk with you about the 14 stocks that hedge funds can’t get enough of—yet, each one is rated a “strong sell” by my technical parameters.

Company
Symbol
Price ($)
Analyst Reco
Microsoft
MSFT
29.34
2.0
Qualcomm
QCOM
57.45
1.9
Citigroup
C
26
2.3
JP Morgan Chase
JPM
32.96
2.0
BP
BP
37.02
1.6
Anadarko Petroleum
APC
62.24
1.8
Cisco Systems
CSCO
16.39
2.3
Liberty Interactive
LINTA
16.95
1.6
Visteon
VC
41.10
2.4
Valeant Pharmaceuticals
VRX
47.92
3.0
CIT Group
CIT
34.10
2.1
Devon Energy
DVN
59.75
2.0
EMC
EMC
24.03
1.7
Illumina
ILMN
44.33
2.4

Tuesday, May 29, 2012

13 Top Hedge Fund Holdings that Look Promising!


13 Top Hedge Fund Holdings that Look Promising!

Last week, I discussed the dismal returns that hedge funds have been giving their investors since they last beat the S&P 500 in 2008. And I noted that the returns suffered due, primarily, to high management fees and lots of turnover.

Today, I want to share with you another reason why hedge fund returns may be lagging: Picking the wrong stocks!

Clearly—although certainly still volatile—you can see that the market has been on the rise for the past six months. But hedge funds returns don’t imitate that. And that may be because their most popular holdings are stocks that—on a technical basis—don’t look very attractive at all.


Goldman Sachs just revealed the top 50 holdings of hedge funds. I decided to look at each individually and put them through my technical analysis screen. And I have to say that even I was amazed at the results!

Of those top 50 stocks, only 13 were rated Buy or Strong Buy by my indicators. Six were Holds and the rest were rated Sell or Strong Sell. Here are the 13 that look the best:

Company
Symbol
Price ($)
Technical Rating
Analyst Reco
Apple
AAPL
572.27
Buy
1.7
Delphi Automotive
DLPH
29.84
Buy
1.6
Tyco
TYC
54.60
Buy
2.0
Visa
V
120.28
Buy
1.9
Yahoo
YHOO
15.47
Buy
2.6
WellPoint
WLP
68.84
Buy
2.0
Charter Communications
CHTR
64.63
Buy
2.0
eBay
EBAY
41.49
Strong Buy
2.0
Equinix
EQIX
167.32
Strong Buy
1.9
Dollar Thrifty
DTG
81.89
Strong Buy
2.6
Mastercard
MA
416.05
Buy
1.9
News Corp
NWSA
19.69
Buy
2.2
Williams Companies
WMB
31.39
Buy
1.9

Now, I’m not suggesting that you run out and buy these stocks. And please note that technical ratings are pretty short-term in nature. But if you want to start building your own hedge fund, these might be some companies to consider.

Tomorrow, I’ll tell you about all the popular hedge fund holdings that look a lot more like sells than buys to me!

Friday, May 25, 2012

Seller’s Market Returning?

For the past few years, many folks have delayed purchases of their next home because they've had a tough time selling their current one. But those days may be nearing an end.

The National Association of Realtors has reported that inventory—the number of homes for sale across the U.S. has declined to a 6.6 month supply. That's down from 9.1 months in April 2011.

We’ve also seen a similar reduction in my neck of the woods. In my real estate area in Cumberland County, Tennessee, inventory now stands at 5.93 months, and in my smaller resort community, it’s 5.4 months.

As well, existing home sales in April rose to 4.62 million from 4.48 million in March, nationwide. And new home sales increased to 343 thousand from 328 thousand in that same time period.

Monday, May 14, 2012

My 2 Favorite Stocks for This Week

It’s been a mixed week on Wall Street. Weekend news of a new, Socialist president in France and a backlash against austerity in Greece sent the markets falling in the first half of the week.

But good unemployment numbers, import and export prices, gave stocks a firmer footing on Thursday.

The good part about the market weakness is more bargains to be had!

Here are my two favorites this week:

American Capital LTD, (Nasdaq: ACAS) American Capital, Ltd. is a private equity and venture capital firm specializing in management and employee buyouts, mezzanine, acquisition, recapitalization, middle market, and growth capital investments.

Price: $9.82
Market cap: $302 b million
Target: $12

Why I Like It: Institutions are buying; analyst’s earnings estimates are increasing; improving economy means more businesses seeking financing for future growth.

SunCoke Energy Inc. (NYSE: SXC) mines and produces coal in the Americas. It is the largest independent producer of metallurgical coke in the Americas. It offers metallurgical and thermal coal used in steelmaking facilities.

Price: $15.30
Market cap: $1.06 billion
Target: $18.00

Why I Like It: Great earnings growth in cokemaking sector; shares look ready for a technical breakout