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Why Are These Four Stocks among Top Gainers Today?

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Markets have turned red today, as investors are digesting news from yesterday’s Fed statement. The central bank has played down the effect of a global economic slump on the state of the U.S. economy, stating that it will use progress in the labor market when deciding whether to raise interest rates at its December meeting. However, several stocks have set off in the opposite direction and among them, Revance Therapeutics Inc (NASDAQ:RVNC)Nokia Corporation (ADR) (NYSE:NOK) and Alcatel Lucent SA (ADR) (NYSE:ALU) are leading the gainers today, while the buzz around EXACT Sciences Corporation (NASDAQ:EXAS) has cooled down after the first hour of trading. Let’s find out what drove these stocks higher this morning.

Wall Street Bull

Wall Street Bull

Most investors can’t outperform the stock market by individually picking stocks because stock returns aren’t evenly distributed. A randomly picked stock has only a 35% to 45% chance (depending on the investment horizon) to outperform the market. There are a few exceptions, one of which is when it comes to purchases made by corporate insiders. Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012. We have been forward testing the performance of these stock picks since the end of August 2012 and they have returned more than 102% over the ensuing 37 months, outperforming the S&P 500 Index by nearly 53 percentage points (read more details here). The trick is focusing only on the best small-cap stock picks of funds, not their large-cap stock picks which are extensively covered by analysts and followed by almost everybody.

Nokia Corporation (ADR) (NYSE:NOK)’s shares are trending higher today after the company announced plans to return $4.4 billion to shareholders. The Finnish giant expects savings related to the takeover of French rival Alcatel Lucent SA (ADR) (NYSE:ALU) to materialize earlier than previously thought and has announced shareholder will receive ordinary dividends of EUR 0.15 ($0.16) per share in 2015 and 2016, and a special dividend of EUR 0.10 ($0.11) per share subject to approval next year. On top of that, Nokia intends to launch a two-year EUR 1.5 billion ($1.64 billion) share buyback program and has committed EUR 3 billion ($3.29 billion) to debt repayment in 2016. Shares of both companies have opened higher today and are currently up by 9%.

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 Nokia Corporation (ADR) (NYSE:NOK) is set to acquire Alcatel Lucent SA (ADR) (NYSE:ALU) in early 2016 for approximately EUR 15.6 billion ($17.1 billion). Following the takeover, Nokia expects to register savings of up to EUR 900 million in 2018 instead of 2019 as previously stated. Compared to its rival, Nokia is much more popular among the hedge funds that we track, as 23 of them have reported long positions at the end of the second quarter. Their combined holdings were valued at $699 million and represented 2.8% of the company’s common stock. Jim Simons and Renaissance Technologies have high hopes for the stock, having increased their stake by 18% to 19.3 million shares during the quarter. Shares of Alcatel Lucent SA (ADR) (NYSE:ALU), in the meantime, were held by just 10 elite funds, with their positions accounting for a minor 1.2% of the company’s outstanding stock. Arrowstreet Capital, run by Peter Rathjens, Bruce Clarke and John Campbell, was the largest holder of Alcatel Lucent shares, having reported ownership of 17 million shares in its latest 13F filing, down by 4% during the quarter.

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