With all three indexes again down 1% or more on Thursday and fears of a potential 2008 replay rising, shares of MakeMyTrip Limited (NASDAQ:MMYT), Arotech Corporation (NASDAQ:ARTX), TherapeuticsMD Inc (NYSEMKT:TXMD), Barrick Gold Corporation (USA) (NYSE:ABX), and Chico’s FAS, Inc. (NYSE:CHS) are surging. Let’s take a closer look at why investors are buying.
Given that Insider Monkey has done a lot of research into what the smart money likes and doesn’t like, let’s also analyze relevant hedge fund sentiment toward these stocks. We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
Leading indian travel company MakeMyTrip Limited (NASDAQ:MMYT) is 27.7% higher today after the company announced that Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) will invest $180 million in the company through convertible bonds. In addition, MakeMyTrip has given Ctrip permission to acquire up to 26.6% of its outstanding shares through convertibles and open market purchases. CEO Deep Kalra said:
“We are delighted to have Ctrip invest in us. Ctrip is the dominant market leader in the online travel market in China. We believe there are many similarities in the Indian and Chinese online travel markets and we expect this strategic relationship between two market leaders to be mutually beneficial.”
A total of 12 elite funds from our database owned 15.40% of MakeMyTrip Limited (NASDAQ:MMYT)’s float at the end of the third quarter.
Shares of nano-cap Arotech Corporation (NASDAQ:ARTX) surged by 17% on technical buying today, as bullish traders bet that the stock’s recent rally will continue. Arotech Corporation (NASDAQ:ARTX) recently closed above a key technical average and some investors hope that management can turn the company around. Due to its small market cap, not many elite funds own the stock. Our data show that only two of the around 730 elite funds that we track were long Arotech at the end of September.
On the next page, we examine TherapeuticsMD Inc, Barrick Gold Corporation (USA), and Chico’s FAS Inc.