U.S stocks are trading in a narrow range this morning, as investors are digesting corporate news and looking for further clues as to a potential rate hike in December. The initial public offerings of Square and Match Group are the highlights of the day, but investors are also talking about KaloBios Pharmaceuticals Inc (NASDAQ:KBIO), Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP), Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Keurig Green Mountain Inc (NASDAQ:GMCR). Let’s find out why.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
KaloBios Pharmaceuticals Inc (NASDAQ:KBIO) shares have skyrocketed today after news emerged that the notorious Martin Shkreli, Chief Executive Officer of Turing Pharmaceuticals, purchased 1.2 million shares of the company. This comes as a surprise, as KaloBios was set to wind down its operations; now, the stock has soared by more than 450% in trading today. The company announced on Friday that it would stop its research of two blood cancer drugs that it was working on. Now, management has received a proposal to continue operations and is reportedly willing to sit at the negotiating table.
Jim Simons is the only hedge fund manager who had the courage to stick with KaloBios Pharmaceuticals Inc (NASDAQ:KBIO) until the very end; only the end never came and Simons is going to get a nice reward. In its latest 13F filing, Renaissance Technologies reported ownership of 135,610 shares valued at $259,000. Right now these same shares are worth more than $1.51 million.
Not all Chinese companies were affected by the recent economic slump, as Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) managed to beat third quarter estimates and has a rosy outlook for the fourth quarter. The online travel company has posted revenues of $500.6 million, 49% higher than last year’s figure and above analysts’ estimates of $490 million. Investors were also thrilled by the company’s operating margin reaching 17% and its solid outlook for the fourth quarter: revenues are expected to grow by 45-to-50%. Shares are up by 19.28% today on the positive results.
Hedge fund support for Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) took a tumble during the third quarter, with the number of funds holding the stock having fallen to 43, from 52 at the end of June. They still have a significant presence among Ctrip shareholders however, controlling roughly 23% of its common stock. Viking Global was among the funds that sought to distance themselves from the company, fearing the economic slump would affect revenues. During the third quarter, Andreas Halvorsen dumped roughly 14% of his position, taking it to 4.91 million shares with a value north of $310 million. Ken Fisher‘s bullish bet on Ctrip should pay off handsomely, with the stock having staged a rally since the end of August. In its latest 13F filing, Fisher Asset Management reported a 25% increase in its holding to 4.05 million shares worth approximately $256 million.