Seeing as all three indexes have surged more than 1% in morning trading as the Federal Reserve promises interest rates will still be low for a while, shares of Inland Real Estate Corporation (NYSE:IRC), Sirius XM Holdings Inc. (NASDAQ:SIRI), Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Pacira Pharmaceuticals Inc (NASDAQ:PCRX), and Intercept Pharmaceuticals Inc (NASDAQ:ICPT) are rallying above the market. In this article, we take a closer look at why investors are buying.
Given that Insider Monkey has done a lot of research into what the smart money likes and doesn’t like, let’s also analyze relevant hedge fund sentiment toward these stocks. In the eyes of most traders, hedge funds are assumed to be underperforming, old investment tools of the past. While there are more than 8000 funds in operation at present, Hedge fund experts at Insider Monkey look at the aristocrats of this group, around 730 funds. Contrary to popular belief Insider Monkey’s research revealed that hedge funds underperformed in recent years because of their short positions as well as the huge fees that they charge. Hedge funds managed to outperform the market on the long side of their portfolio. In fact, the 15 most popular small-cap stocks among hedge funds returned 102% since the end of August 2012 and beat the S&P 500 Index by 53 percentage points (see the details here).
Inland Real Estate Corporation (NYSE:IRC), which owns and operates shopping centers in strong geographic markets, is 6.09% higher today after the company announced it will sell itself to DRA Advisors for $10.60 in cash per share in a deal that should close in the first half of 2016. Chairman Thomas P. D’Arcy said in a statement:
“The Board has been focused on the options available to address the long-term discount at which the Company’s shares have traded versus private market valuations and its shopping center REIT peers. The Board unanimously believes this all-cash offer is the best course of action to address this valuation gap and provide our stockholders with strong relative value for their investment.”
A total of 10 funds from our database were among today’s winners as they were long roughly 4.3% of Inland Real Estate Corporation (NYSE:IRC)’s float as of September 30.
Moving on, Sirius XM Holdings Inc. (NASDAQ:SIRI) shares have surged by 3.13% after the company announced it has resigned radio personality Howard Stern to a new 5-year contract. Although financial terms of the deal haven’t been disclosed, Stern is making $80 million a year from his previous contract. Shares of the satellite radio broadcaster have rallied more than 17% year-to-date on the back of solid earnings results. There could be more upside ahead, as the smart money is optimistic on the company, with the number of elite funds long Sirius XM Holdings Inc. (NASDAQ:SIRI) increasing by three to 35 during the third quarter.
On the next page, we examine the reasons behind the gains registered by the three pharmaceutical stocks.
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) shares have surged by 15% in morning trading after the company announced it has entered into a 10-year fulfillment agreement with Walgreens Boots Alliance Inc (NASDAQ:WBA) in which Walgreens will carry Valeant’s ophthalmology and OTC products in more than eight thousand of its stores in exchange for Valeant reducing its wholesale prices for some of its drugs by 10%. The price reductions could help Valeant buy some good will in Washington and the company hopes to extend its distribution to more independent retail pharmacies over the next few years. Bill Ackman’s Pershing Square is a big believer in Valeant Pharmaceuticals Intl Inc (NYSE:VRX), holding a 9.9% stake in the company.
Pacira Pharmaceuticals Inc (NASDAQ:PCRX) shareholders received some good news today after Pacira announced that it has resolved its lawsuit with the US Food and Drug Administration related to the company’s promotional practices of EXPAREL, a single-dose, non-opioid local anesthetic. The FDA originally had threatened the company with enforcement action with a warning letter, but later withdrew it. Less regulatory scrutiny is always a good thing, and shares of Pacira Pharmaceuticals Inc (NASDAQ:PCRX) are up 11% in morning trading so far. A total of 29 funds among those we follow amassed stakes equal to around 27% of the company’s float as of September 30.
Rising biotech and healthcare stocks seem to be a trend today, as shares of Intercept Pharmaceuticals Inc (NASDAQ:ICPT) are also 16% in green. Traders are buying the stock because of rumors that Shire PLC (ADR) (NASDAQ:SHPG) might be interested in acquiring the company. Intercept Pharmaceuticals Inc (NASDAQ:ICPT) has a promising pipeline of chronic liver and intestinal disease drugs that make it a potential takeover target. Jim Simons’ Renaissance Technologies owned 61,600 shares of Intercept at the end of September.