Here’s Why Traders Are Watching Coach, Red Robin, MGP Ingredients, and Two Other Stocks

Although the major indexes are relatively unchanged as the earnings results from Microsoft and other have failed to stir excitement in the broader market, traders are eagerly watching Coach Inc (NYSE:COH), Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB), MGP Ingredients Inc (NASDAQ:MGPI), Northwest Biotherapeutics, Inc (NASDAQ:NWBO), and Sonic Corporation (NASDAQ:SONC).

In this article, we analyze why each stock is trending and we will use data from the last round of 13F filings to assess the hedge fund sentiment towards them.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).

Coach Inc (NYSE:COH) is in the spotlight today after Betaville published an article stating that its sources say that the company is working with the investment bank Evercore on a potential $20 billion merger with Burberry. This was later contradicted by Reuters, whose sources say the two are not in active merger negotiations. Analysts, meanwhile, have chimed in, with one saying that the potential combination between the two would be a ‘merger of problems’. Dmitry Balyasny’s Balyasny Asset Management almost doubled its stake in Coach Inc (NYSE:COH) to 2.195 million shares during the second quarter.

Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) shares are 5% in the green after the restaurant chain released preliminary results for its fiscal third quarter. The company expects adjusted net income of $0.61 per share, versus the Street’s estimate of $0.49 per shar, while total revenues are seen at $297 million, with comparable restaurant sales declining by 3.6% year-over-year. In addition, the management revised its guidance for the full fiscal 2016, lowering adjusted EBITDA to an estimated range of $141 million to $145 million. Those numbers were evidently better than market expectations, which explains the rally. Out of the 749 top funds that we track, 15 owned shares of Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) at the end of June, down 2 funds from the previous quarter.

On the next page, we examine MGP Ingredients, Northwest Biotherapeutics, and Sonic Corporation.MGP Ingredients Inc (NASDAQ:MGPI) has fallen 7% after a local TV station in Kansas reported that one of the company’s plants in Atchison has suffered a major chemical spill. Apparently two chemicals that shouldn’t be mixed together were mixed, and that caused a reaction that grew unmanageable. The number of funds from our database with holdings in MGP Ingredients Inc (NASDAQ:MGPI) rose by two quarter-over-quarter to seven at the end of June.

Northwest Biotherapeutics, Inc (NASDAQ:NWBO)’s stock has plunged by 18.5% today after the company announced that it has agreed to sell to an institutional investor up to 14 million shares of common stock at a purchase price of $0.38 per share. The sale of the shares are expected to close around October 26. Seven funds tracked by us had a bullish position in Northwest Biotherapeutics, Inc (NASDAQ:NWBO) at the end of June, unchanged from the previous quarter.

Sonic Corporation (NASDAQ:SONC) is 2.4% in the green after drive-in restaurant chain’s board of directors increased the company’s buy-back authorization by $40 million. The additional authorization allows for up to $195 million of common stock to be bought back through August 31, 2017. Among the funds we track, 18 funds owned $180.87 million worth of Sonic Corporation (NASDAQ:SONC)’s stock, which accounted for 13.80% of the float on June 30, versus 16 funds and $210.4 million, respectively, on March 31.

Disclosure: None