With the new investing year having just begun, plenty of meaningful events have caused major stocks such as Apple Inc. (NASDAQ:AAPL), Tesla Motors Inc (NASDAQ:TSLA) as well as some other securities such as CymaBay Therapeutics Inc (NASDAQ:CBAY), Agile Therapeutics Inc (NASDAQ:AGRX), and Shake Shack Inc (NYSE:SHAK) to trend. In this article, we examine the trending events more in depth and use 13F data to determine how elite funds were positioned among them in the third quarter.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.
Leading off are two major movers on the day. Nano-cap CymaBay Therapeutics Inc (NASDAQ:CBAY) shares are up 45% in pre-market trading after the company entered into an exclusive licensing agreement with Kowa Pharmaceuticals America for the commercialization and development of Arhalofenate in the U.S. Under the terms, CymaBay could receive up to $15 million in upfront and near-term milestone payments and is also eligible to receive up to an additional $190 million in payments based upon achievements of specific regulatory, development, and sales milestones. The company is also eligible to receive tiered double digit royalties on future sales of arhalofenate products. Kowa will fully fund development through NDA approval. Of the 742 elite funds we track, 4 funds owned $3.48 million of CymaBay Therapeutics Inc (NASDAQ:CBAY) and accounted for 8.60% of the float on September 30, versus 4 funds and $3.54 million respectively on June 30. As with all nano-cap, investors should do due-diligence on both sides of the trade.
Agile Therapeutics Inc (NASDAQ:AGRX) shares are 67% in the red in pre-market trading after after the company announced top-line results from its Phase 3 SECURE clinical trial of Twirla, its investigational low-dose combined hormonal contraceptive patch. Although management labeled the result from the trial as positive and stated that the company plans to resubmit a NDA for Twirla in the first half of 2017, some investors/traders aren’t so optimistic. Some data-points that might have caused the sell-off include the Pearl Index data (which demonstrates efficacy), which analysts were expecting to come in below 4, but that the trial result came in the range of 5.36-6.42 for certain demographics. The discontinuation rate of 51.4% was also higher than some traders’ expectations. 9 top funds were long Agile Therapeutics Inc (NASDAQ:AGRX) at the end of September, up 1 from the previous quarter.
On the next page, we examine the events causing Apple Inc, Tesla Motors Inc, and Shake Shack Inc to trend.
Apple Inc. (NASDAQ:AAPL) is trending after Bloomberg reported that India isn’t necessarily inclined to grant generous concessions such as softening local sourcing regulations to Apple so that the company can produce iPhones in the country. With President-elect Trump asking Apple Inc. (NASDAQ:AAPL) to bring more manufacturing back home and Chinese wages steadily trending higher, Apple’s iPhone labor manufacturing costs could increase if the company does not find adequate adjusting mechanisms. Given that the labor for assembling the iPhone is just a small fraction of the total bill, Apple’s gross margins won’t be too affected though. Ken Fisher’s Fisher Asset Management owned more than 11.3 million shares at the end of September.
In other tech company news, Tesla Motors Inc (NASDAQ:TSLA) is down 2% after the company reported deliveries of around 76,230 vehicles, and production of 83,922 cars/SUVs for 2016. Although Tesla’s production of 24,882 vehicles in the fourth quarter of 2016 was 64% higher than the comparable quarter of 2015, some traders were expecting higher numbers. According to our records, 34 top funds owned shares of Tesla Motors Inc (NASDAQ:TSLA) at the end of September, down 2 funds from the previous quarter.
Wrapping our coverage of trending stocks is Shake Shack Inc (NYSE:SHAK), whose shares climbed 4.48% in extended market trading on the news that it will replace Chemours in the S&P 600 index. Given that any index inclusion means some buying from certain funds, some traders are trying to front-run. Whether all of the news has been priced in is unknown, however. 11 top funds had a bullish position in Shake Shack Inc (NYSE:SHAK) at the end of September, down 3 funds from the previous quarter.