Why Are Traders Piling Into These Five Stocks?

Although the Dow and S&P 500 are up by only 0.35%, the Nasdaq index is 0.8% in the green today. In this article, we’ll take a closer look at five NASDAQ stocks that are leading the way in terms of gains.

Those stocks are Cesca Therapeutics Inc (NASDAQ:KOOL), Merchants Bancshares,Inc. (NASDAQ:MBVT), DragonWave, Inc.(USA) (NASDAQ:DRWI), T-Mobile US Inc (NASDAQ:TMUS), and Acacia Communications, Inc. (NASDAQ:ACIA). In addition to uncover why they’re moving, we’ll also use 13F data to see how hedge funds have traded the five stocks recently.

Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details).

Wall Street Bull

Wall Street Bull

Despite there being no fundamental news concerning the stock today, nano-cap Cesca Therapeutics Inc (NASDAQ:KOOL) is 25% higher as technical traders buy for momentum reasons. Over 6 million shares of the normally thinly-traded stock have changed hands today, or over 60% of the float. A phase III trial assessing the company’s SurgWerks-CLI Kit and VXP System is expected to begin soon. As with all nano-caps, traders should exercise caution when considering any move. None of the funds that we track owned shares of Cesca Therapeutics Inc (NASDAQ:KOOL) at the end of June.

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Merchants Bancshares,Inc. (NASDAQ:MBVT) shares have lifted by 30% after Community Bank System, Inc. (NYSE:CBU) agreed to buy it in a cash-and-stock deal for total consideration of around $304 million. According to the terms, shareholders of Merchants Banchsares will have the option to receive consideration per share equal to either 0.963 shares of Community Bank System common stock, $40.00 in cash, or the combination of 0.6741 shares of Community Bank System and $12.00 in cash, subject to an overall proration to 70% stock and 30% cash. Community Bank expects the deal to be around $0.10 per share accretive to 2018 GAAP earnings. Four funds in our system had a long position in Merchants Bancshares,Inc. (NASDAQ:MBVT) at the end of June, unchanged from the end of March.

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On the next page we’ll examine why DragonWave, T-Mobile, and Acacia Communications are in surging.