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Why Callon, Seadrill, OncoSec, EMC, and MGM’s REIT Are Enjoying Strong Gains Today

In spite of some disappointing earnings calls before the market opened, stocks are trading up on Wednesday afternoon, helped by recuperating oil prices (driven by lower-than-expected stockpile figures) and upbeat housing data. Among the stocks accompanying the surge in the markets are Callon Petroleum Company (NYSE:CPE), Seadrill Ltd (NYSE:SDRL), OncoSec Medical Inc (NASDAQ:ONCS), EMC Corporation (NYSE:EMC), and MGM Growth Properties LLC (NYSE:MGP). Let’s take a look into the events pushing these stocks higher today, and see what the hedge funds in our database think about the companies in question.

At Insider Monkey, we track more than 785 hedge funds, whose 13F filings we analyze as part of our small-cap strategy. Our research has shown that imitating a portfolio that includes the 15 most popular small-cap stocks among hedge funds can outperform the market by as much as 95 basis points per month on average (see more details here).

Callon Rides Wave of News

Let’s start with Callon Petroleum Company (NYSE:CPE), which is up by 7.4% in the early afternoon hours. The rally in the small-cap independent oil and natural gas company, which started on Tuesday evening and has extended into today’s trading session, was triggered by a few pieces of news. On the one hand, the company announced it had agreed to acquire assets operated by Big Star Oil and Gas, LLC in West Texas’ Permian Basin for $220 million in cash and approximately 9.3 million shares of Callon’s common stock. In addition, the company said it had jointly acquired 4,745 net acres north of the Garrison Draw field, also in Texas, and that it had sold 27.5% of this asset to TRP Energy for roughly $33 million. Finally, management announced that it has priced an underwritten public offering of 22 million shares of the company for total estimated gross proceeds of $187 million.

Among the funds that we track, 19 were long Callon Petroleum Company (NYSE:CPE) at the end of the fourth quarter. On February 23, Steve Cohen’s Point72 Asset Management declared a marked increase to its stake in the company, to more than 4.07 million shares from 760,300 shares held at the end of December.

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Rally Continues for Seadrill on Recuperating Oil Prices

Next up is Seadrill Ltd (NYSE:SDRL), which is up by almost 2.9% on Wednesday afternoon, adding to the 12.63% gains posted on Tuesday. The spike seems to be driven by the surge in oil prices, which has helped many oil-related companies the past couple days. Even though the Doha oil producers’ meeting failed to reach a settlement, oil remains above $40 a barrel, helped by lower-than-expected U.S stockpile figures.

As of the end of 2015, Seadrill Ltd (NYSE:SDRL) counted 21 hedge fund supporters in our database, including Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, which declared holding 4.98 million shares of the company as of December 31 after nearly doubling its holding during the fourth quarter.

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Three more stocks posting big gains are studied on the following page.

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