GW Pharmaceuticals (GWPH), Sally Beauty Holdings Inc. (SBH) & More: Why These Stocks Are Making Monster Moves

Ahead of a key OPEC meeting and the US presidential debate, the markets have opened on a shaky note. The Dow briefly plunged by 150 points, before making some gains, though all three major indices are currently trading down on the day. 

Some major stocks that are making big moves today are GW Pharmaceuticals PLC-ADR (NASDAQ:GWPH), Sally Beauty Holdings Inc. (NYSE:SBH), Pain Therapeutics Inc (NASDAQ:PTIE), Natus Medical Inc (NASDAQ:BABY), and DURECT Corporation (NASDAQ:DRRX). In this article, we’ll look at the news behind the big movements witnessed in these stocks today and see how successful hedge funds have been trading them lately.

Through extensive research we have determined that the best approach to outperform the broader indices is to follow hedge funds into their top small-cap ideas. In our backtests, a portfolio of the 15 most popular small-cap stocks generated monthly alpha of 81 basis points, versus 0.7 percentage points posted by hedge funds’ top large- and mega-cap picks (see more details here).

GW Pharmaceuticals PLC-ADR (NASDAQ:GWPH) shares have jumped by 15.80% on high volume today and touched their 52-week high of $126.47 on the company’s announcement of positive results from a pivotal phase 3 trial for Epidiolex (cannabidiol) for the treatment of Lennox-Gastaut Syndrome. The company achieved the study’s primary endpoint for both Epidiolex doses, with high statistical significance compared to a placebo. GW Pharmaceuticals PLC-ADR (NASDAQ:GWPH) ranked as hedge funds’ favorite marijuana stock as of June 30, with 17 funds holding $394 million worth of the company’s shares, amassing 27.90% of its outstanding stock. As part of that marijuana stocks article, users voted overwhelmingly that marijuana use should be legalized, with 89.1% of the 203 respondents stating that it should be.

Sally Beauty Holdings Inc. (NYSE:SBH) has gained over 6% today after the company was selected to join the S&P MidCap 400. Its will move into the index after the close of trading on September 27. Moves into more-prominent indexes result in a lot of buying activity and upward momentum for stocks, as mutual funds and other groups which mimic the index add it to their own portfolios. The number of funds in our database long Sally Beauty Holdings Inc. (NYSE:SBH) stood at 17 as of June 30, down from 22 at the end of March.

We’ll check out three more massive movers, including two of the day’s biggest losers, on the next page.

Pain Therapeutics Inc (NASDAQ:PTIE) has plunged drastically today, hitting its 52-week low of $0.96 during the current session on losses of nearly 55%. The stock was battered by the news that its New Drug Application for its opioid treatment Remoxy ER, licensed from DURECT Corporation (NASDAQ:DRRX), would not be approved in its present form. Durect has also plunged on the news, falling by over 31% today. The necessary steps to attain approval for the drug with label claims against injection, inhalation, and snorting, as outlined in the FDA’s Complete Response Letter, could take the company a year to achieve and $5 million in costs.

Seven hedge funds in our database were long Pain Therapeutics Inc (NASDAQ:PTIE) on June 30, with their holdings valued at $35 million in aggregate at that time and amounting to 35.30% of Pain Therapeutics’ outstanding stock. Meanwhile, ten hedge funds held about $43 million worth of DURECT Corporation (NASDAQ:DRRX)’s stock as of the end of the June quarter, accounting for 25.80% of its float.

Natus Medical Inc (NASDAQ:BABY) announced the acquisition of GN Otometrics for $145 million in an all-cash deal today. The acquisition will help Natus Medical expand its product portfolio and is expected to be immediately accretive to its non-GAAP earnings. Natus Medical also updated its third quarter revenue guidance, lowering it to $89 million-to-$91 million from the previous estimated range of $97 million-to-$98 million. The news has caused the stock to slump by nearly 10% today. 20 hedge funds that we track held about $137 million worth of Natus Medical’s stock on June 30.

Disclosure: None