Crude futures are up more than 1% today as investors look forward to this month’s informal OPEC/Russia meeting in Algeria. Similarly, all three index futures are higher as many traders don’t expect the FOMC to raise interest rates this week.
Among the stocks making headlines on Monday are Infoblox Inc (NYSE:BLOX), Depomed Inc (NASDAQ:DEPO), Horizon Pharma PLC (NASDAQ:HZNP), Deutsche Bank AG (USA) (NYSE:DB), and Wells Fargo & Co (NYSE:WFC). Let’s find out why traders are talking about these stocks and use data from the latest 13F filing to see how the world’s greatest investors were positioned towards them at the end of the second quarter.
Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 700 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).
Infoblox Inc (NYSE:BLOX)‘s stock has surged by over 14% after the company agreed to sell itself to Vista Equity Partners for $26.50 per share in cash, which represents a total value of $1.6 billion. Infoblox Inc (NYSE:BLOX) agreed to be acquired in part due to pressure exerted by activist Jeffrey Smith‘s Starboard Value, which established a new stake of 3.85 million shares in the tech stock during the second quarter. According to our records, 25 funds (including Starboard) had a bullish position in Infoblox Inc (NYSE:BLOX) at the end of the second quarter and many of them are likely happy campers today.
Similarly, Depomed Inc (NASDAQ:DEPO) and Horizon Pharma PLC (NASDAQ:HZNP) are in the spotlight after Starboard Value released the following statement concerning Depomed’s board:
“Based on recent press reports, it appears that Depomed may have hired bankers to explore a sale… However, we remain extremely concerned that any potential sale process may not be undertaken with genuine intent, but rather as a smokescreen to distract from the required Board changes we are seeking and protect the current Board’s positions beyond the Special Meeting….Press reports state that the Company has not yet begun a sale process but may do so in the future. We have little confidence that the Company will begin a thorough and genuine process that includes all potential suitors in a manner designed to successfully maximize value for all shareholders.”
Starboard strongly urges investors nominate the directors proposed by the fund to the board as the best way to unlock value for shareholders. As background information, Horizon had offered to buy Depomed before in a stock-for-stock deal, but was rebuffed. In the letter, Starboard says the same could potentially happen again to other acquirers if its directors are not nominated. Of the around 750 funds that we track, 23 and 27 investors were long Depomed Inc (NASDAQ:DEPO) and Horizon Pharma PLC (NASDAQ:HZNP), respectively, at the end of June.
On the next page, we find out why Deutsche Bank AG (USA), and Wells Fargo & Co are in the spotlight.