The U.S. stocks opened lower today, but managed to regain some of the lost ground before noon. Chinese trade data and weakness in the energy market have put pressure on the stock market. Nevertheless, there are several stocks that have defied the general trend downwards and have been surging since the opening bell. Read on to find out why Jarden Corp (NYSE:JAH), Fairchild Semiconductor Intl Inc (NASDAQ:FCS), FireEye Inc (NASDAQ:FEYE) and TherapeuticsMD Inc (NYSEMKT:TXMD) are among today’s top gainers.
Why do we pay attention to hedge fund sentiment. Most investors ignore hedge funds’ moves because as a group their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the market in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research has shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period. We have been tracking the performance of these stocks in real-time since the end of August 2012. After all, things change and we need to verify that back-test results aren’t just a statistical fluke. We weren’t proven wrong. These 15 stocks managed to return more than 102% over the last 38 months and outperformed the S&P 500 Index by 53 percentage points (see the details here).
The excitement generated by the news of a potential merger between Jarden Corp (NYSE:JAH) and Newell Rubbermaid Inc. (NYSE:NWL) continues today with investors driving Jarden shares up by as much as 6.5% this morning. The news broke yesterday in the late hours of trading, sending shares of Jarden Corp (NYSE:JAH) soaring by as much as 12% before cooling off, while Newell Rubbermaid stock surged by nearly 15%. Investors have assumed a more precautionary stance today, since no details are available and talks are in an early phase. Both companies carry a similar value, however, since Newell Rubbermaid’s market cap exceeds that of Jarden by roughly $2 billion, market participants expect the latter to be the subject of a takeover. Should a deal take place, the combined company would generate an estimated $14 billion in sales per year. Both stocks have been solid performers since the stock market bottom in 2009, with Jarden stock price having increased 11-fold, while Newell Rubbermaid surged by more than 630%.
The smart money’s confidence in Jarden Corp (NYSE:JAH) registered a significant boost during the third quarter, as the number of funds invested in the stock grew to 42 from 33. Larry Robbins‘ Glenview Capital held the largest stake in Jarden at the end of September among the funds we follow, reporting ownership of 4.03 million shares worth $197 million in its latest 13F filing. Ken Griffin is also among those betting on this company, but has chosen to trim his stake by 5%. Still, his fund, Citadel Investment Group, held 3.61 million shares valued at $176 million at the end of the quarter.
ON Semiconductor Corp (NASDAQ:ON)’s plans to acquire Fairchild Semiconductor Intl Inc (NASDAQ:FCS) have been dealt a serious blow today, as the latter has received an unsolicited takeover bid worth $2.46 billion. This would value Fairchild’s shares at $21.70 apiece, which represents an 11% premium over the Monday’s closing price and also beats ON Semiconductor’s offer of $20 per share. Fairchild did not disclose the name of the bidder, but said that the Board of Directors will analyze and consider the offer. This is yet another example of escalating takeover bids in an industry that has seen merges worth an estimated $110 billion so far this year. Fairchild Semiconductor shares are currently trading at $20.65, up by 5.71% this morning.
Chuck Royce is the biggest fan of Fairchild Semiconductor Intl Inc (NASDAQ:FCS) among the funds we track, having boosted his stake by 20% during the quarter. In its latest 13F filing, Royce & Associates indicated a holding that amounts to roughly 1.64 million shares worth a little over $23 million. Frank Brosens and Taconic Capital have decided to join the party during the quarter, initiating a stake that amassed exactly 1.3 million shares at the end of September. Overall, hedge fund sentiment towards the company took a tumble during Q3, with the number of long hedge fund positions decreasing to 14 from 20 reported as of the end of June.
FireEye Inc (NASDAQ:FEYE)’s stock jumped today, as the stock was upgraded by Citigroup to ‘Buy’ from ‘Neutral’. According to Citi’s Walter Pritchard, cited by Barron’s, the company can maintain its position in the market and has shown significant strength compared to its competitors. He also feels shares are trading at a significant discount and has thus increased the price target to $35 per share. Market participants were quick to pounce, with FireEye Inc (NASDAQ:FEYE) rallying by 8.5% during the first hour of trading.
During the third quarter, FireEye Inc (NASDAQ:FEYE) has gained the attention of a couple more hedge funds, with 37 elite investors reporting a long position in the company. Still, their holdings account for just 7.1% of the company’s common stock. The largest position among the funds Insider Monkey follows is held by Karthik Sarma and SRS Investment Management. In its latest 13F filing, the fund reported ownership of 4.47 million shares, up by 36% during the quarter and valued at $142 million.
TherapeuticsMD Inc (NYSEMKT:TXMD)’s stock has skyrocketed this morning by as much as 50% after the company announced positive Phase 3 results for one of its drug candidates. A developer of women’s healthcare products, TherapeuticsMD has been testing TX-004HR, a softgel designed to address dyspareunia, a symptom of vulvar and vaginal atrophy (VVA) due to menopause. Roughly one half of women in the United States are affected by this condition, which has a significantly negative impact on their quality of life.
“With efficacy observed as early as two weeks and the convenience of the applicator-free vaginal softgel, we believe that, if approved, TX-004HR has the potential to offer a highly differentiated, new treatment option that meets the needs of the millions of postmenopausal women with VVA who are suffering from pain during sexual intercourse,” said Robert G. Finizio, the CEO of TherapeuticsMD.
Key managers have queued up to dump TherapeuticsMD Inc (NYSEMKT:TXMD)’s stock during the third quarter, although in the end the number of hedge fund invested in the stock remained the same at 13. Israel Englander sold nearly a quarter of his holding, leaving Millennium Management with 2.02 million TXMD shares at the end of September, while Peter Kolchinsky reduced his exposure by 10%. His fund, RA Capital Management, holds roughly 1.52 million shares worth $8.90 million, according to its latest 13F filing.