Stocks could be caught in a tug-of-war, as investors weigh positives of a reopening economy against worries about the virus spreading. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions MONTREAL, June 12, 2020 (GLOBE NEWSWIRE) — Earth Alive Clean Technologies Inc. (TSXV: EAC) (the “Company”), a Canadian soil health company that develops… Tencent Music has acquired a nearly 5.2 percent stake in Warner Music Group, following a 10 percent buyout of Universal Music Group (UMG) earlier this year.
Wall Street and New York Stock Exchange in New York.
Stocks could be caught in a tug-of-war in the week ahead, as investors weigh the potential positives of a reopening economy against worry that the coronavirus continues to spread.
In the past week, the S&P 500’s sharp gains briefly drove the index into positive territory for the year, before a bruising sell-off at the end of the week. Stocks were more than 47% above the March 23 low before investors got spooked by signs the coronavirus is picking up in some areas.
The Fed also dampened sentiment when it released economic forecasts Wednesday that showed a slow recovery and interest rates at zero through the end of 2022. Investors will hear more of the same when Fed Chairman Jerome Powell speaks before Congress this Tuesday and Wednesday in his semi-annual economic testimony. He may provide more clarity on the Fed’s bond buying and other policy moves.
Retail sales for May are released Tuesday, and that will be an important look at consumer spending activity. It is the most important data in the coming week, other than the weekly jobless claims report on Thursday.
Stocks rose on Friday with the S&P 500 up more than 1% after Thursday’s sharp sell-off that sent the index down nearly 6%. Treasury yields, which move opposite price, also moved sharply lower as investors moved to the safety of bonds. The 10-year yield was back to 0.70%, well off the high of 0.95% in the week earlier.
“We’ve been overbought for awhile and digesting gains would be natural,” said Sam Stovall, chief investment strategist at CFRA.
Stovall said the fact that 97% of the S&P 500 companies’ stocks were above their 50-day moving average this past week was a warning. The 50-day moving average is a momentum indicator, and if a stock or index rises above it, it is usually a positive, but if they all do, it’s a contrarian warning.
“Historically that’s just too high … and also the P/E on the S&P was 25.1 of forward 12-months earnings, which is a 52% premium to the P/E average since 2000,” he said. The P/E, or the price-to-earnings ratio, is an important tool to value stocks, and it averages around 16.5 times.
In the sell-off, stocks that would benefit from the economy’s reopening were the hardest hit. Investors had been jumping into those names, driving them higher at a dizzying pace. They were also the sectors that were last to join the rally, like banks, casinos, airlines and hotels.
“Once the pullback runs its course I think investors will move back again into the sectors and subsectors that were most beaten up in the bear market,” said Stovall.
Scott Redler, partner with T3Live.com, said he lightened up his holdings earlier in the week. “There were some clues early in the week that the market was vulnerable, like when the S&P closed below 3,191 on Tuesday. You had some feverish trading in some of the very speculative names,” he said.
Stovall said other headwinds hang over the market, and one big one is the upcoming presidential election, which could become a bigger influence on the market. RealClearPolitics has President Donald Trump trailing former Vice President Joseph Biden by 8.1 points in the latest average of polls.
“Trump’s numbers are just looking so bad, and if the Fed needs to keep interest rates at zero and we have the potential for a resurgence in Covid cases, then Trump is not going to benefit from an economic recovery, and as a result, that gives Biden a better chance of being elected,” said Stovall. “It’s not necessarily that the market dislikes Biden, but they dislike uncertainty. And a decline in equity prices would be representative of that uncertainty.”
Retail sales are typically a barometer for consumer spending, and when Americans were shut in their homes they did much less shopping than usual. April data showed a 16.7% drop in sales, but consumers did spend online.
Economists are watching Tuesday’s report on May sales closely, particularly after the May jobs report had a large upside surprise. There were 2.5 million jobs added in May, instead of an expected loss of 8.3 million.
Mark Zandi, chief economist at Moody’s Analytics, said business-to-business spending data for May implies that retail sales were flat compared with April’s depressed level and could be down 22% from a year ago.
Zandi used data from Cortera, which collects information on about $1.5 trillion in business-to-business spending. In an analysis of spending by retailers in May, it found there were gains from April in some categories, including furniture, gasoline stations and restaurants.
“Clothing and sporting goods store sales have been crushed, and that continued in May. Restaurants, gasoline stations and furniture stores have been hit hard, but showed strong improvement in May. Food and health and personal care stores have done well through the crisis, but gave some of that back in May,” notes Zandi. “Online retailers, general merchandise stores (which includes WalMart and Target), and building material and garden supply stores (Home Depot and Lowes) have navigated the crisis well, and May was another solid month.”
Zandi said weakness in apparel and sporting goods washed out the gains in other areas.
Strategists said Powell did not surprise the market with his comments this past week, but his sober approach reminded investors that the Fed policy will have to be in place for a very long time to pull the economy out of its deep rut. That will keep markets on high alert during his two days of testimony.
“I think the cat’s out of the bag. I don’t think he can sugarcoat it. The thing he’s got to worry about is he needs help. He needs Congress and the administration to come up with another fiscal rescue package. He can’t do it on his own,” said Zandi. “He has to keep the pressure on them and get a piece of legislation before they go on August recess. … He’s speaking as much to the American people as he is to the policy makers.”
Zandi said the Fed has acted aggressively and swiftly to unfreeze credit markets when they locked up in March, but the economy needs more stimulus ahead of a wave of potential business defaults and with a high level of unemployment. The Fed’s balance sheet has ballooned to $7.2 trillion, and on Wednesday the central bank committed to monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage securities.
“I think he continues to lay the foundation for policy changes to come,” said Zandi. “He’s strongly suggesting there’s going to be more monetary support, and that would come in the form of a few things – it would be performance dependent forward guidance. … He’s going to make it clear until the economy is at full employment and inflation is at least at target, if not above.”
Zandi said Powell may discuss yield curve controls, which would mean the Fed would set targets for interest rate levels in the Treasury market, and make purchases to influence rates. Some economists believe the Fed will adopt that tool before the end of the year.
“I think he’s going to more clearly define the amount of QE they’re doing going forward. He’ll try to preserve some optionality, but he’ll try to make it known, they’re buying a lot of bonds for a long time to come,” Zandi said.
But the hearings could be more politicized, and Powell may be criticized by Congress for helping financial markets more than Main Street, said John Briggs, head of strategy at NatWest Markets. “I’d be surprised if there’s a lot new, given it comes on the heels of the FOMC meeting,” Briggs said.
8:30 a.m. Empire State survey
4:00 p.m. Treasury TIC data
Fed Chairman Jerome Powell before Senate banking
8:30 a.m. Retail sales
8:30 a.m. Business leaders survey
9:15 a.m. Industrial production
10:00 a.m. Business inventories
10:00 a.m. NAHB survey
Fed Chairman before House Financial Services Committee
8:30 a.m. Housing starts
8:30 a.m. Initial jobless claims
8:30 a.m. Philadelphia Fed
8:30 a.m. Q1 current account
10:15 a.m. Boston Fed President Eric Rosengren
Author: Patti Domm
Jumia Technologies AG (JMIA): Are Hedge Funds Right About This Stock?
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Jumia Technologies AG (NYSE:JMIA)?
Jumia Technologies AG (NYSE:JMIA) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of the first quarter of 2020. At the end of this article we will also compare JMIA to other stocks including Atlantic Power Corp (NYSE:AT), IRSA Propiedades Comerciales S.A. (NASDAQ:IRCP), and Allied Motion Technologies, Inc. (NASDAQ:AMOT) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are seen as unimportant, old financial tools of years past. While there are more than 8000 funds with their doors open at present, Our experts look at the masters of this group, about 850 funds. These hedge fund managers direct the lion’s share of the smart money’s total capital, and by following their inimitable investments, Insider Monkey has revealed several investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to view the latest hedge fund action encompassing Jumia Technologies AG (NYSE:JMIA).
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards JMIA over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Is JMIA A Good Stock To Buy?
Among these funds, Point72 Asset Management held the most valuable stake in Jumia Technologies AG (NYSE:JMIA), which was worth $6.3 million at the end of the third quarter. On the second spot was 683 Capital Partners which amassed $0.9 million worth of shares. Citadel Investment Group, Citadel Investment Group, and PEAK6 Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position 683 Capital Partners allocated the biggest weight to Jumia Technologies AG (NYSE:JMIA), around 0.11% of its 13F portfolio. Point72 Asset Management is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to JMIA.
Judging by the fact that Jumia Technologies AG (NYSE:JMIA) has faced a decline in interest from the smart money, logic holds that there exists a select few funds who were dropping their full holdings by the end of the first quarter. Intriguingly, Anand Parekh’s Alyeska Investment Group said goodbye to the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at about $1.8 million in stock. Nancy Zevenbergen’s fund, Zevenbergen Capital Investments, also cut its stock, about $1.2 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Jumia Technologies AG (NYSE:JMIA). We will take a look at Atlantic Power Corp (NYSE:AT), IRSA Propiedades Comerciales S.A. (NASDAQ:IRCP), Allied Motion Technologies, Inc. (NASDAQ:AMOT), and Legacy Housing Corporation (NASDAQ:LEGH). All of these stocks’ market caps are closest to JMIA’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AT,10,22041,-2 IRCP,4,7670,0 AMOT,13,36277,2 LEGH,4,5281,0 Average,7.75,17817,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $8 million in JMIA’s case. Allied Motion Technologies, Inc. (NASDAQ:AMOT) is the most popular stock in this table. On the other hand IRSA Propiedades Comerciales S.A. (NASDAQ:IRCP) is the least popular one with only 4 bullish hedge fund positions. Jumia Technologies AG (NYSE:JMIA) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on JMIA as the stock returned 111% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
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Earth Alive Grants Stock Options and Confirms Record Date
MONTREAL, June 12, 2020 (GLOBE NEWSWIRE) — Earth Alive Clean Technologies Inc. (TSXV: EAC) (the “Company”), a Canadian soil health company that develops and manufactures advanced microbial technology products announces that, on June 8, 2020, it has granted stock options to purchase a total of 2,000,000 common shares of the Company to certain senior officers of the Company. The options are exercisable at a price of $0.11 per share and have a term of five years.
These options vest over a period of twenty-four months following the grant date and have been granted in accordance with the Corporation’s stock option plan.
As well, to clarify, on page 4 of the management information circular of the Company provided in connection with the Annual General Meeting of the shareholders of the Company to be held on June 30, 2020, the record date was accidentally and incorrectly noted as June 26, 2020. The correct record date, as set forth in the Company’s May 11, 2020 notice of meeting and record date, is May 26, 2020.
About Earth Alive Clean Technologies
Earth Alive is a soil health company and an industry leader in microbial technologies. Earth Alive’s innovative products contribute to regenerative agriculture, natural dust suppression with minimal water use and industrial cleaning that is ecological and human friendly. For additional information, please visit: www.earthalivect.com.
Forward-Looking Information: Certain information in this press release contains forward-looking information and forward-looking statements, which reflect the current view of management with respect to the Company’s objectives, plans, goals, strategies, outlook, results of operations, financial and operating performance, prospects and opportunities. Wherever used, the words “may”, “will”, “anticipate”, “intend”, “estimate”, “expect”, “plan”, “believe” and similar expressions identify forward-looking information and forward-looking statements. Forward-looking information and forward-looking statements should not be regarded as a guarantee of future events, performance or results, and will not necessarily be an accurate indication of whether, or the times at which, such events, performance or results will be achieved. All of the information in this press release containing forward-looking information or forward-looking statements is qualified by these cautionary statements. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and forward-looking statements and are cautioned not to place undue reliance on such information and statements. The Company does not undertake to update any such forward-looking information or forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Earth Alive Clean Technologies Inc.
LaSalle, Quebec, CANADA
Author: Earth Alive Clean Technologies Inc.
Tencent Music Acquires $100MM Stake in Warner Music Group
Tencent Music’s substantial investment was revealed in a Securities and Exchange Commission (SEC) filing, which Digital Music News obtained early this morning.
Investors are required to disclose their stock purchases to the SEC when the shares equal or exceed five percent of those offered by the company. As WMG’s offering consists of 77 million shares, Tencent’s four-million-share investment comprises about 5.194 percent of all available stock.
This filing is dated June 3rd – when Warner Music Group returned to the stock market after being taken private by Access Industries in 2011 – but the document doesn’t identify the precise value of Tencent’s investment.
Prior to WMG’s return to the public market, rumors circulated that Tencent would seek to purchase a piece of the company. Moreover, the Shenzhen-based brand closed a $3.3 billion deal with French conglomerate and Universal Music Group (UMG) parent company Vivendi earlier this year, in exchange for a 10 percent ownership stake in UMG.
Reports also emerged that the Kingdom of Saudi Arabia would seek out a portion of Warner Music Group, but thus far, the Middle Eastern state hasn’t done so. In late April, the country’s Public Investment Fund dropped $500 million on a 5.7 percent stake in leading concert promoter Live Nation.
At the time of this writing, Warner Music Group’s shares were trading for $30.66 apiece – 76 cents above yesterday’s closing price. Tencent Music (bought and sold under the symbol TME), for its part, was down more than 2.25 percent on the day, to $12.12 per share.
Author: About The AuthorDylan Smith