Why Are These Stocks Surging Today?

It’s been a pretty good day to be a bull on Wall Street on Tuesday. All three indexes are in the green, with the Dow up 122 points, the S&P now firmly above the key 2,000 level, and the NASDAQ index 1.3% higher.

Among the stocks that are trading above the market are GoPro Inc (NASDAQ:GPRO), Xencor Inc (NASDAQ:XNCR), Cisco Systems, Inc. (NASDAQ:CSCO), Kinder Morgan Inc (NYSE:KMI), and New Concept Energy, Inc. (NYSEMKT:GBR). Let’s find out why these stocks are gaining ground today and what the funds we track at Insider Monkey think about the companies in question.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 770 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).

GoPro Rises After Competitor Seeks Bankruptcy Protection

GoPro Inc (NASDAQ:GPRO) shares are around 1.70% in the green after wearable digital recorder maker iON Worldwide filed for bankruptcy protection. Due to competition and commoditization, iON’s revenue fell to $12.4 million in 2015 from greater than $25 million in 2014. The revenue drop caused cash flow problems that iON management could not dig out of. GoPro bulls hope the less competition will help the company sell more products for the coming quarters. Of the 766 elite funds we track, 16 funds owned $96.26 million worth of GoPro Inc (NASDAQ:GPRO)’s stock, which accounted for 5.90% of the float on March 31, versus 18 funds and $237.45 million, respectively, on December 31.

Xencor Surges on Strategic Collaboration and License Agreement  

Xencor Inc (NASDAQ:XNCR) shares have surged by over 35% after the company announced it had entered into a collaboration and license agreement with Novartis to develop and commercialize new therapeutics, including XmAb14045  and XmAb 13676. Under the terms, the two parties will share costs for the worldwide development of the two drugs, and Xencor will maintain U.S. commercialization rights while Novartis will retain ex-U.S. commercialization rights. Xencor will receive $150 million in upfront payments, is eligible for milestone payments, and and will receive double digit royalties outside the U.S on its developed drugs. A total of 11 funds tracked by us had a long position in Xencor Inc (NASDAQ:XNCR) at the end of the first quarter, down by four funds from the previous quarter.

On the next page, we examine Cisco Systems, Kinder Morgan, and New Concept Energy.
Cisco Systems Makes an Acquisition

Cisco Systems, Inc. (NASDAQ:CSCO)’s shares have inched up by 1% after the tech giant announced an agreement to purchase CloudLock for $293 million in equity and cash. CloudLock is a leading cloud security provider and the acquisition should help Cisco bolster its growth in that important sector. The deal should close by November of this year. At the end of March, 65 funds tracked by us had a bullish position in Cisco Systems, Inc. (NASDAQ:CSCO), up by five over the quarter.

Kinder Morgan Sells 50% Equity Interest in Utopia Pipeline

Kinder Morgan Inc (NYSE:KMI)’s stock is in the green this afternoon after the pipeline giant announced that Riverstone Investment Group LLC will buy a 50% interest in the Utopia Pipeline Project. According to the terms, Riverstone agreed to make an upfront cash payment provided at closing to Kinder Morgan, consisting of reimbursement to Kinder Morgan for its 50% share of prior capital expenditures related to the project and a payment in excess of capital expenditures to recognize the value created by Kinder Morgan in developing the project to its current stage. The total project cost is expected to be around half a billion dollars when all is said and done. Kinder Morgan shares have also rallied due to higher crude prices. The number of funds tracked by us with holdings in Kinder Morgan Inc (NYSE:KMI) fell by nine quarter-over-quarter to 58 at the end of March.

Technical Trading Detected at New Concept Energy

Although there is no fundamental news concerning the company, technical traders are likely buying nano-cap New Concept Energy, Inc. (NYSEMKT:GBR) for its momentum. Shares of the company have surged 63% on the day on no news and the price action is likely causing a short squeeze. Almost a quarter of the float is short, and the company only has a share float of 0.78 million according to FINVIZ. As with all low float nano-caps, traders buying and selling should do due-diligence. None of the funds tracked by us held shares of New Concept Energy, Inc. (NYSEMKT:GBR), according to the latest round of 13F filings.

Disclosure: none