What’s the Deal With These Trending Stocks: Chipotle, Rite Aid, Alere, Tata Motors, ZIOPHARM Oncology

The markets have struggled to extend their record-making gains achieved earlier this week as investors react to Thursday’s terrorist attack in Nice, France. However, better than expected U.S retail sales data has helped to offset some of the pessimism generated by the event.

Among the most noteworthy trending stocks today are Rite Aid Corporation (NYSE:RAD), Alere Inc (NYSE:ALR), Chipotle Mexican Grill, Inc. (NYSE:CMG), ZIOPHARM Oncology Inc. (NASDAQ:ZIOP), and Tata Motors Limited (ADR) (NYSE:TTM). Let’s find out why investors are watching these stocks closely and analyze how the best hedge funds in the world feel about them.

At Insider Monkey, we track around 765 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

Walgreens/Rite Aid Merger Still Has Hope

Rite Aid Corporation (NYSE:RAD)’s stock has surged by more than 4% in morning trading today following a report published by the New York Post which claimed that Walgreens Boots Alliance Inc. (NASDAQ:WBA)‘s planned acquisition of Rite Aid still has hope, as Walgreens is in talks with the Federal Trade Commission concerning regulatory approval for the deal. The source said that the talks with the FTC about divestitures show that regulators are open to granting their approval of the merger. The report also claimed that Walgreens has started to “quietly” auction its stores in areas where the planned merger would have the largest impact. A total of 52 hedge funds in our database of 766 active funds were long Rite Aid Corporation (NYSE:RAD) at the end of the first quarter.

Canaccord Genuity Upgrades Alere

Alere Inc (NYSE:ALR) has jumped by 6.46% since the opening bell today, thanks to equities researchers at Canaccord Genuity upgrading the company to ‘Buy’ from ‘Hold’ in a report issued to investors. The firm also upped its price target on the health information provider to $56 from $44. Alere said on Thursday that it expects to restate some of its financial results after finding “material weakness” in its internal controls and transactions. The troubled company also announced the recall of its blood monitoring devices earlier this week. As of the end of the first quarter, 45 hedge funds that we monitor held stakes in Alere Inc (NYSE:ALR), up from 30 funds a quarter earlier.

On the next page we’ll discuss why Chipotle, ZIOPHARM and Tata Motors are in the crosshairs of investors today. 

Morgan Stanley Downgrades Chipotle

Shares of Chipotle Mexican Grill, Inc. (NYSE:CMG) have slipped by more than 2% in morning trading after Morgan Stanley downgraded the company to ‘Equal Weight’ from ‘Overweight’. Analysts at the financial services company think that a full sales recovery could take years, as customers don’t yet appear ready to go back to the Denver-based restaurant chain in force, following the company’s recent food safety concerns. Problems for Chipotle started when about 80 students got sick after eating at one of its restaurants back in December 2015. All of the students were diagnosed with E. coli and norovirus. Ken Griffin’s Citadel Investment Group was one of 39 hedge funds in our system that were bullish on Chipotle Mexican Grill, Inc. (NYSE:CMG) at the end of the first quarter.

ZIOPHARM’s Stock Battered After Death of a Patient

ZIOPHARM Oncology Inc. (NASDAQ:ZIOP)’s stock is getting punished on Friday, plummeting by more than 12% today after the company said on Thursday that a  patient in its IL-12 glioblastoma clinical trial had died from an intracranial hemorrhage, 15 days after receiving the therapy. The exact reasons for the cause of death are still being analyzed according to a press release issued by the company. The event and subsequent stock slide has also forced the Boston-based biopharmaceutical company to put off plans for a $50 million equity offering. Marc Lisker, Glenn Fuhrman and John Phelan’s MSDC Management owns more than 3.55 million shares of ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) as of the end of March.

Tata Motors Regains its Position in Passenger Car Market

Tata Motors Limited (ADR) (NYSE:TTM) is 0.72% in the green this morning after the company regained the third position in the Indian passenger car segment in the first quarter of fiscal year 2017. Tata Motors’ new cars, especially its hatchback Tiago, helped the company retake the position. The Mumbai, India-based automobile giant also said on Friday that it will seek shareholders’ approval at its upcoming annual general meeting to raise INR30 billion ($447.26 million) through non-convertible debentures (NCD) this year. Out of the funds in our database, 15 held shares of Tata Motors Limited (ADR) (NYSE:TTM) at the end of the first quarter of 2016.

Disclosure: None