2 Stocks Soaring on Ackman News

Bill Ackman increased his stake in United Technologies stock

Managing Editor
Feb 28, 2018 at 3:33 PM
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U.S. stocks have traded on both sides of the aisle today, with markets last seen lower as oil prices slump. Not all the day's action is to the downside, though, with Dow stock United Technologies Corporation (NYSE:UTX), global nutrition company Herbalife Ltd. (NYSE:HLF), and Taser parent Axon Enterprise Inc (NASDAQ:AAXN) all trading higher. Here's a closer look at what shares of UTX, HLF, and AAXN are reacting to today.

Ackman Stake Nudges UTX Stock Toward Record High

United Technologies stock is up 2% to trade at $136.61, after Bill Ackman told CNBC that Pershing Square Capital Management was building a stake in the aerospace firm. The news sent UTX stock up to $138.49 at its intraday peak -- just shy of its Jan. 29 record high of $139.21. Longer term, UTX shares have added 21% year-over-year.

Short-term options traders have shown a preference for puts over calls at an unusual pace, per UTX's Schaeffer's put/call open interest ratio (SOIR) of 2.39 -- which ranks 2 percentage points from a 52-week high. Continued technical outperformance from UTX could prompt an unwinding of these bearish bets, potentially creating tailwinds for the Dow stock.

Herbalife Stock Puts the Squeeze on Shorts

Bill Ackman is also boosting shares of Herbalife, after the activist investor exited his long-held short position against the company. In response, HLF stock is up 6.7% to trade at $92.48, and earlier notched a fresh record high of $95.88. Herbalife stock is pacing for its best day since Oct. 6, and has now tacked on an impressive 37% in 2018. 

A continued short squeeze could provide more tailwinds for the stock. Short interest decreased by 22% during the last two reporting periods to 9.22 million shares, the lowest level in almost six years. However, this still represents nearly 24% of HLF's total available float, and more than six days of pent-up buying demand, at the average pace of trading. 

Axon Enterprise Soaring After Earnings, Upgrade

Shares of Axon Enterprise are up 29.5% to trade at $35.26 -- near the top of the Nasdaq today -- after the company reported record fourth-quarter revenue . In response, Ladenburg Thalmann upgraded the stock to "buy" from "neutral," waxing optimistic over the new direction taken by CEO Rick Smith. In addition, Dougherty and Craig-Hallum chimed in with price-target hikes to $36 and $37, respectively.

Axon Enterprise is on track to post its best single-day session since November 2008, and is just a chip-shot from its 2015 record high of $35.95. Although short interest dipped by 4.5% during the last two reporting periods, there are still 16.65 million shares sold short -- representing 32% of AAXN's total available float, and more than 16 days of pent-up buying demand, at the average pace of trading. 


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