Highpower International Inc. (NASDAQ:HPJ), KaloBios Pharmaceuticals Inc. (NASDAQ:KBIO), e-Future Information Technology Inc. (NASDAQ:EFUT) and MagneGas Corp. (NASDAQ:MNGA) have enjoyed strong trading sessions today on various news, including a proposal for acquisition, ownership disclosures, and an agreement for business partnerships. We will look further into this news, as well as take a look at the hedge fund sentiment towards these stocks.
Why do we pay attention to hedge fund sentiment? Most investors ignore hedge funds’ moves because as a group their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the market in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research have shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period. We have been tracking the performance of these stocks in real-time since the end of August 2012. After all, things change and we need to verify that back-test results aren’t just a statistical fluke. We weren’t proven wrong. These 15 stocks managed to return 102% over the last 38 months and outperformed the S&P 500 Index by 53 percentage points (see the details here).
Highpower International Inc. (NASDAQ:HPJ) is up by 23.71% after a proposal for the sale of more than 50% of each of the company’s three subsidiaries that are based in China for RMB280 million, or approximately US$43.8 million.
Highpower International Inc. (NASDAQ:HPJ), which uses Nickel-Metal Hydride and lithium-based rechargeable batteries, said its board of directors has formed a team to review the non-binding investment proposal under which Anshan Co-Operation (Group) Co. Ltd. will buy newly-purchased shares of Shenzhen Highpower Technology Co. Ltd., Springpower Technology (Shenzhen) Co. Ltd. and Icon Energy System (Shenzhen) Co. Ltd. for no more than RMB650 million, or approximately US$101.7 million. If a deal is reached, Anshan Co-Operation will acquire the controlling entity of each of the subsidiaries. There is no assurance that a sale will be executed.
Through the end of September, just two out of the 730 hedge funds in our database held shares of the company, amounting to 3.70% of its outstanding stock. Top investor Renaissance Technologies, founded by billionaire mathematician Jim Simons, holds $1.22 million worth of Highpower International’s shares.
KaloBios Pharmaceuticals Inc. (NASDAQ:KBIO) has soared by 33.23%, following a tweet from CEO Martin Shkreli’s announcing the halt to the lending of shares of the company.
“I spoke with my counsel & advisers and decided to stop lending my $KBIO shares out until I better understand the advantages of doing so,” the newly-installed CEO said in the post. He followed it with another tweet, saying “I apologize for any inconvenience this may create in lending markets and I will probably resume lending at some point.”
Shares of KaloBios Pharmaceuticals Inc. (NASDAQ:KBIO) surged following a Nov. 18 disclosure that Shkreli bought a majority stake in the company. He is also the owner of Turing Pharmaceuticals AG.
Just one hedge fund in our database had an ownership stake in the company on September 30, totaling 3.30% of its outstanding stock. That fund was again Renaissance Technologies, which held $259,000 worth of KaloBios shares (which are now worth quite a bit more).