In today’s top stories, XPeng announces two new vehicles set to compete with Tesla, Peloton plans to start selling its bikes on Amazon and tech stocks make up majority of hedge funds’ holdings. Morgan Stanley and UBS also highlight recession-proof stocks to watch, and Hong Kong’s stock market sees increasing short selling pressure.
XPeng challenges Tesla
Chinese electric car manufacturer XPeng [XPEV] has put pressure on Tesla [TSLA] by announcing details of two new vehicles it is planning to release next year. Xpeng has been expanding its fleet to help the company compete with Tesla in the world’s largest EV market and one of the new additions is rumoured to be a strong competitor with Tesla’s Model Y. This news came after a larger than expected Q2 loss sent the stock tumbling earlier in the week.
Hedge funds shift towards growth stocks
Technology stocks once again make up the bulk of hedge funds’ largest holdings. Analysis from Goldman Sachs shows Amazon [AMZN] to be the most frequent stock seen in hedge funds’ top holdings. This was closely followed by Microsoft [MSFT], Alphabet [GOOGL], Meta [META], Visa [V] and Apple [AAPL]. Hedge funds have slashed positions in the energy and material sectors in favour of increased exposure to growth stocks.
Banks reveal recession-proof shares
With recession fears rampant, Morgan Stanley and UBS have screened for top-quality stocks that they believe remain in good value, despite the recession risks. Shell [SHEL] and Eni [E] were the favourites in the energy sector, while Irish food group Kerry Group [KYGA] appeared in a list of cheap defensive stocks. Danish shipping company AP Moller Maersk [MAERSK-B] appeared in the banks’ screens.
Hong Kong short squeeze risks
The number of shorted positions in Hong Kong shares has grown to levels where a short squeeze could be triggered, according to quantitative analysis at Morgan Stanley. Betting against Hong Kong shares has been a profitable activity in the last year with the Hang Seng Index down 17.6% in 2022. However, with short-selling accounting for 20% of this week’s total trading activity, short-sellers are working to cover their bearish positions.
Peloton joins forces with Amazon
Peloton [PTON] has struck a deal with Amazon to sell its bikes with the online retailer. Peloton is aiming to turn around slowing revenue growth as it exits its pandemic boom. There is hope that the Amazon partnership will widen the product’s reach, with the stock rising 20% on Wednesday in response to the news. Amazon has also announced it is planning to axe its telehealth service Amazon Care by the end of the year.
Pets at Home continues pandemic growth
Pets at Home [PETS] has been able to continue to strong growth that the pet care industry saw during the pandemic. The company’s pre-tax profit was up 65.3% in the year ending in March. However, share prices have fallen for Pets at Home and veterinary diagnostic company IDEXX Laboratories [IDXX] this year as rising costs look to eat away at future margins.
Episode 130 — Where Acquirers Funds’ Tobias Carlisle is finding value
In this week’s episode of Opto Sessions, Tobias Carlisle, founder and managing director of investment firm Acquirers Funds, offers further insight into his deep value approach to investing and talks about some of the characteristics investors should look out, such as stock buybacks. Amid the current market downturn, Carlisle said that Hewlett Packard [HPQ] is an interesting value stock that stands out for meeting his criteria.
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