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Actionable news in FCX: FreePORT-MCMORAN Inc,

Why Are Investors Piling Into These 4 Stocks Today?

At a time when the energy markets are still on edge after OPEC’s December 4 decision to keep oil lower for longer, and with the S&P 500 barely in the green today, shares of Dow Chemical Co (NYSE:DOW), E I Du Pont De Nemours And Co (NYSE:DD), Kinder Morgan Inc (NYSE:KMI), and Freeport-McMoRan Inc (NYSE:FCX) are surging. Let’s find out why investors are piling into these four stocks this morning. In addition, let’s also examine what hedge fund sentiment has to say about each of them and their long-term prospects.

Why do we track hedge fund activity? From one point of view we can argue that hedge funds are consistently underperforming when it comes to net returns over the last three years, when compared to the S&P 500. But that doesn’t mean that we should completely neglect their activity. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. In our back-tests covering the 1999-2012 period hedge funds’ top small-cap stocks edged the S&P 500 index by double digits annually. The 15 most popular small-cap stock picks among hedge funds also bested passive index funds by around 53 percentage points over the 38-month period beginning from September 2012 (see the details here).

First on our list are two global chemical companies, Dow Chemical Co (NYSE:DOW) and E I Du Pont De Nemours And Co (NYSE:DD), whose shares are up by 11% and 10.9% respectively, on the news that the two will announce a merger...