Here’s Why Traders Are Buzzing Around Lions Gate, Stellar Biotechnologies, and Three Other Stocks

Stocks are trading in the green on Thursday as markets continue to steadily recover from the Brexit-triggered wild swings. However, investors remain selective as the future of the global economy is still dotted with uncertainties after UK’s exit from the European Union.

Meanwhile, some stocks are worth watching closely today, including TESARO Inc (NASDAQ:TSRO), Stellar Biotechnologies Inc (NASDAQ:SBOT), Ampio Pharmaceuticals Inc (NYSEMKT:AMPE), Lions Gate Entertainment Corp. (USA) (NYSE:LGF), and Starz (NASDAQ:STRZA). Let’s find out why these stocks are in the spotlight today and analyze the hedge fund sentiment towards them.

At Insider Monkey, we track around 770 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

TESARO Down After Announcing Public Offering

Shares of TESARO Inc (NASDAQ:TSRO) opened slightly down, but are currently over 5% in the green after the company announced a public offering of $300 million worth of common stock. The pharmaceutical company gave the underwriters a 30-day option to purchase up to an additional $45 million worth of shares. TESARO’s stock more than doubled on Wednesday after the company announced positive phase 3 trial results for its ovarian cancer drug Niraparib. A total of 19 hedge funds from our database were bullish on TESARO Inc (NASDAQ:TSRO) at the end of the first quarter. Samuel Isaly’s OrbiMed Advisors owns about 1.9 million shares of the company.

Stellar Biotechnologies Plunges After Offering Announcement

Stellar Biotechnologies Inc (NASDAQ:SBOT)’s has plunged by nearly 7% so far today after the company said it had entered into definitive agreements to sell 1,687,500 common shares in a registered direct offering and unregistered warrants to purchase 1,265,625 unregistered common shares in a private placement. The combined price for one registered common share and one unregistered warrant to purchase 0.75 unregistered common shares will be $4.00. The offering is expected to close by July 6. The biotechnology company intends to use the proceeds from the transaction for research and development, operating costs, capital expenditures and general corporate purposes.

We continue to discuss today’s hottest stocks on the next page.

Ampio Pharmaceuticals’ Stock Punished after Failed Trial

Ampio Pharmaceuticals Inc (NYSEMKT:AMPE)’s stock has lost around 56% so far after the company announced that phase 3 trial of osteoarthritis pain treatment missed its primary endpoint. The primary endpoint was the change in WOMAC A pain at week 12 as compared to saline, but the overall response recorded only 20% improvement in pain. Fred Knoll’s Knoll Capital Management is one of just fou hedge funds followed by us that reported stakes in Ampio Pharmaceuticals Inc (NYSEMKT:AMPE) as of the end of March this year.

Lions Gate to Acquire Starz

Lions Gate Entertainment Corp. (USA) (NYSE:LGF) and Starz (NASDAQ:STRZA) are making headlines today after the announcement that  Lions Gate will acquire Starz in a cash-and-stock deal, valued at $4.4 billion including debt. The deal unifies a major movie maker with the second-biggest cable network in the US. Under the terms of the deal, Starz’s Class A shareholders will receive $18 in cash per share and two-thirds of a share of Lions Gate’s non-voting stock. With ownership of 20 million shares, billionaire Warren Buffett’s Berkshire Hathaway is a one of 34 funds tracked by us that own class A shares of Starz (NASDAQ:STRZA) as of the end of the first quarter. On the other hand, 32 funds reported stakes in Lions Gate Entertainment Corp. (USA) (NYSE:LGF) in the same period. Among them, Mark Rachesky’s MHR Fund Management has more than 30.2 million shares of the company.

Disclosure: none