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Yahoo
30-07-2025
- Business
- Yahoo
How investors went from stagflation panic to bull market euphoria
The stock market has pulled a 180 in the last few months. Investors went from worrying about stagflation to cheering the bull rally in a matter of months. Market pros say two things have helped brighten the outlook, but warn investors may be getting too excited. The market has gone through a stark transformation in the last few months. A crescendo of panic about the economic impacts of tariffs has slowly but surely given way to a chorus of euphoric voices on Wall Street calling for a new bull market. What happened? How did markets go from fearing the dreaded S-word to shrugging off the most dramatic upheaval of trade policy in a century? A few months ago, recession calls were springing up on Wall Street, and investors were fretting over stagflation, a situation where inflation remains stubbornly high while economic growth slows, and which economists warn is even worse than a normal recession. Those fears have seemingly been wiped off the table, even more so now that second-quarter GDP data released on Wednesday showed the US economy returned to growth mode this spring. Goldman Sachs, Bank of America, and other forecasters have lifted their economic outlooks in recent weeks, and most investors now expect the economy to avoid a recession, with 65% of global fund managers saying they expected a soft landing, according to a July BofA survey. Meanwhile, meme stocks have come roaring back, another sign that animal spirits have returned to markets. And yet, Donald Trump's tariffs are still on. The US tariff rate is about 18.2%, according to the latest update from the Yale Budget Lab. That's the highest the overall tariff rate has been since 1934, the researchers said. "If you'd had told me a year ago or six months ago that we were going to have 15% across-the-board tariffs, I would have thought the S&P 500 would be considerably lower than where it is now. I certainly wouldn't think it would be making new highs," Doug Peta, the chief US investment strategist at BCA Research, told Business Insider. Market pros who spoke to BI say two things led the market to stage a dramatic turnaround. Tariffs aren't as bad as feared The fact that tariffs are still on hardly matters to the market. It's more so that they aren't as bad as initially feared, Peta said. Stocks have climbed as Trump has announced more trade deals with key partners, generally setting tariff rates below what he had initially proposed. "Perhaps it is a tribute to the administration's salesmanship, that if you tell people things are going to be really horrible — it's going to be 50%, it's going to be 125%, which is what we got to during the tit-for-tat with China — and then you say, 'Oh, you know what? It's just going to be 15%.' I think markets have really relaxed on that," Peta said. And even when Trump has dialed up his tariff threats, like when he posted letters to 23 countries on Truth Social, markets have been confident in the TACO Trade, Peta added. He was referring to the idea that investors have been buying stocks despite the president's unfriendly policies, due to the assumption that Trump Always Chickens Out. Paul Hickey, the co-founder of Bespoke Investment Group, told BI that the apocalyptic mood that accompanied Liberation Day was due to the "shock value" of Trump's tariffs. "Market doesn't just rally 20% in a short period of time for nothing," he said. "Usually there was either a major event to cause that, or else there was a major sell-off beforehand where there was an overreaction." The improbably strong US economy And then there's the economy, which has bucked calls for a dire slowdown alongside higher tariffs fueled by inflation. While fears of stagflation were running rampant several months ago, GDP is expanding again after contracting in the first quarter. Bank of America recently dialed down its stagflation calls, saying it sees a number of reasons the economy could thrive in the coming quarters, including Trump's pro-growth agenda and big capex plans among US companies. Meanwhile, inflation has drifted slightly higher but overall price growth is relatively close to the Fed's 2% inflation target. The final and most important leg of any stock market rally—corporate earnings—has also been holding up well. Of the S&P 500 companies that have reported results so far this quarter, 80% have beaten earnings estimates, according to the latest update from FactSet. "People were expecting just terrible commentary from companies reporting and a weakness in the economy and that didn't materialize," Hickey said. Is there a shoe to drop? It is still possible that the full impact of tariffs has yet to be felt in markets and the economy. "I think most right now are just sort of waiting for the effect of the tariffs to become more clear," Parag Thatte, director of global asset allocation and US equity strategy at Deutsche Bank, told BI. That also means there's a chance investors could be getting ahead of themselves, BCA's Peta said. "I do think some of the optimism is unwarranted," he told BI, adding that he was skeptical some of the US's recent trade deals would counterbalance the negative growth impact of tariffs. Talk of a pullback has been swirling on Wall Street since major indexes climbed back to record highs. Evercore ISI, Stifel, Pimco, and HSBC are among the firms that have recently flagged the risk of a stock correction, even as major indexes power past record after record in the last several weeks. In the short term, Hickey also believes optimism could soon start to fade, especially considering that the market is entering historically weak seasonal stretch from late July through September. "The pendulum has really shifted," Hickey said of the market's seasonal backdrop. "It wouldn't surprise us to see the market rally pause in the short term." Read the original article on Business Insider
Yahoo
15-05-2025
- Business
- Yahoo
Is Global Payments Inc. (GPN) The Most Crowded Hedge Fund Stock That is Targeted by Short Sellers?
We recently published a list of . In this article, we are going to take a look at where Global Payments Inc. (NYSE:GPN) stands against other most crowded hedge fund stocks that are targeted by short sellers. Hedge funds piling into a stock is a signal of conviction. After all, if institutional investors are backing a company, there has to be a good reason for it, right? Things get interesting when the same stock ends up with a high short interest. Where some investors back the company to become successful, others bet on its downfall. This contradiction is often eagerly tracked by investors, as it can potentially lead to explosive moves to either side. Consider, for instance, a scenario where a stock with a high short interest and a high hedge fund holding starts going up. As everyone rushes to buy more of the already popular stock, short sellers rush to close their positions, triggering a strong bull rally. We decided to shortlist stocks that were the most likely candidates for such a rally. To come up with our list of 15 most crowded hedge fund stocks that are targeted by short sellers, we only considered stocks with a market cap of at least $1 billion and a short interest of at least 3%. We then ranked these stocks by the number of hedge funds that have the stock in their portfolio. A payment terminal in action with customers apart of the experience. Number of Hedge Fund Holders: 71 Short Interest: 3.14% Global Payments Inc. (NYSE:GPN) operates as a software solutions and payment technology provider. The company operates in the Issuer Solutions and Merchant Solutions segments. It offers sales and deployment, authorization, customer support, reconciliation and dispute management, and other services. RBC Capital Markets recently downgraded the stock from Outperform to Sector Perform, citing concerns over the company's sale of the Issuer Solutions business and planned acquisition of Worldpay. The investment bank also lowered its target price from $139 to $86. Analysts are cautious over the deal's potential success, highlighting potential distractions for management and execution risks. Analyst Dan Perlin noted: 'We believe large 'Scale Motivated' transactions designed to protect an incumbent position and fend off more nimble innovators tend to be very long battles and haven't proven to be overly successful.' For 2025, the company expects adjusted net revenue growth of 5% to 6% on a constant currency basis. The Merchant Solutions segment is anticipated to grow around 6%, along with the Issuer Solutions division's projected growth of approximately 4%. Adjusted operating margins are predicted to increase by 50 basis points for the year. Global Payments announced a share repurchase plan worth $250 million to optimize shareholders' return. Overall, GPN ranks 12th on our list of most crowded hedge fund stocks that are targeted by short sellers. While we acknowledge the potential of GPN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than GPN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: and . Disclosure: None. This article is originally published at .
Yahoo
15-05-2025
- Business
- Yahoo
Is Occidental Petroleum (OXY) The Most Crowded Hedge Fund Stock That is Targeted by Short Sellers?
We recently published a list of . In this article, we are going to take a look at where Occidental Petroleum Corporation (NYSE:OXY) stands against other most crowded hedge fund stocks that are targeted by short sellers. Hedge funds piling into a stock is a signal of conviction. After all, if institutional investors are backing a company, there has to be a good reason for it, right? Things get interesting when the same stock ends up with a high short interest. Where some investors back the company to become successful, others bet on its downfall. This contradiction is often eagerly tracked by investors, as it can potentially lead to explosive moves to either side. Consider, for instance, a scenario where a stock with a high short interest and a high hedge fund holding starts going up. As everyone rushes to buy more of the already popular stock, short sellers rush to close their positions, triggering a strong bull rally. We decided to shortlist stocks that were the most likely candidates for such a rally. To come up with our list of 15 most crowded hedge fund stocks that are targeted by short sellers, we only considered stocks with a market cap of at least $1 billion and a short interest of at least 3%. We then ranked these stocks by the number of hedge funds that have the stock in their portfolio. Oil derricks in the background with a few workers in the foreground, emphasizing the company's oil and gas production activities. Number of Hedge Fund Holders: 68 Short Interest: 3.65% Occidental Petroleum Corporation (NYSE:OXY) explores, acquires, and develops oil and gas properties. The company generates its revenue through Chemical, Oil and Gas, and Midstream & Marketing segments. The stock price has struggled so far, dropping over 21% this year. Occidental Petroleum (NYSE:OXY) was recently downgraded by Raymond James from Strong Buy to Outperform due to short-term uncertainty over oil prices. The firm also lowered its target price from $81 to $64. However, analyst John Freeman highlighted that the company expects continued improvements in its CrownRock assets. It also anticipates cost savings of over $1 million per well. The company's 1PointFive subsidiary secured approval from the U.S. Environmental Protection Agency (EPA) last month. This approval is for Class VI permits, allowing the firm to store carbon dioxide from its STRATOS Direct Air Capture facility in Texas. The facility aims to capture over 500,000 metric tons of CO2 annually and is projected to start its commercial operations in 2025. Occidental's President and CEO, Vicki Hollub, mentioned: 'The Class VI permits are a catalyst to unlock value from carbon dioxide and advance Direct Air Capture technology as a solution to help organizations address their emissions or produce vital resources and fuels.' Overall, OXY ranks 13th on our list of most crowded hedge fund stocks that are targeted by short sellers. While we acknowledge the potential of OXY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than OXY but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: and . Disclosure: None. This article is originally published at . Sign in to access your portfolio
Yahoo
15-05-2025
- Business
- Yahoo
Is HEICO Corporation (HEI) The Most Crowded Hedge Fund Stock That is Targeted by Short Sellers?
We recently published a list of . In this article, we are going to take a look at where HEICO Corporation (NYSE:HEI) stands against other most crowded hedge fund stocks that are targeted by short sellers. Hedge funds piling into a stock is a signal of conviction. After all, if institutional investors are backing a company, there has to be a good reason for it, right? Things get interesting when the same stock ends up with a high short interest. Where some investors back the company to become successful, others bet on its downfall. This contradiction is often eagerly tracked by investors, as it can potentially lead to explosive moves to either side. Consider, for instance, a scenario where a stock with a high short interest and a high hedge fund holding starts going up. As everyone rushes to buy more of the already popular stock, short sellers rush to close their positions, triggering a strong bull rally. We decided to shortlist stocks that were the most likely candidates for such a rally. To come up with our list of 15 most crowded hedge fund stocks that are targeted by short sellers, we only considered stocks with a market cap of at least $1 billion and a short interest of at least 3%. We then ranked these stocks by the number of hedge funds that have the stock in their portfolio. A fighter jet in formation, revealing the prowess of the companies defense arm. Number of Hedge Fund Holders: 67 Short Interest: 4.02% HEICO Corporation (NYSE:HEI) is an aerospace and defense company. Its stock has outperformed the market so far this year, but a high short interest is keeping investors on edge. HEI trades at a PE of 65, above its 5-year average of 60.4. This high valuation is in part driving the short sellers' confidence, though the hedge funds aren't buying the stock without reason either. HEICO Corporation (NYSE:HEI) is one of those stocks where the active management itself has a stake. The Mendelson family has been running the company for well over three decades and hasn't done a bad job. Moreover, the stock incentives structure for employees means every employee feels a part of the company, preferring to take stock when given the opportunity. It is the future growth that is keeping the valuation high in HEICO's case. The company's Flight Support Group has grown at a long-term average of 7% while other segments have shown even better growth in the recent past. Operating margins continue to go up, once again demonstrating the management's abilities. So, what are the short sellers looking at in the stock? HEICO Corporation (NYSE:HEI) has a solid business, and its growth rate is impressive. However, the October quarter last year failed to deliver the expected numbers and could well have raised some short-term concerns. The management pinned it on inventory destocking, and short sellers are possibly thinking the high valuation wasn't justified. The stock fell considerably in the months after that earnings announcement, but has almost regained all the losses, mainly due to the proven strength of the business. Overall, HEI ranks 14th on our list of most crowded hedge fund stocks that are targeted by short sellers. While we acknowledge the potential of HEI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than HEI but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: and . Disclosure: None. This article is originally published at . Sign in to access your portfolio
