The U.S. stock market inched down on Monday amid a volatility in crude prices and following last week’s U.S. jobs report which led to gains at the end of the last week. Some major acquisitions and deals also moved important stocks today. Among the stocks to watch today are Alaska Air Group, Inc. (NYSE:ALK), Virgin America Virgin America Inc (NASDAQ:VA), Brocade Communications Systems, Inc. (NASDAQ:BRCD), Ruckus Wireless Inc (NYSE:RKUS), Groupon Inc (NASDAQ:GRPN), and Tesla Motors Inc (NASDAQ:TSLA). This article explains the reasons behind the changes in these stocks in detail along with hedge funds’ sentiment around them.
At Insider Monkey, we track around 790 hedge funds and other institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
Alaska Air Group, Inc. (NYSE:ALK)’s stock has declined approximately 5% on Monday following its announcement that it would acquire Virgin America Virgin America Inc (NASDAQ:VA) in a $2.60 billion. This acquisition would create the fifth largest US airline. Alaska Air Group, Inc. (NYSE:ALK) will pay $57 per share for Virgin America Inc (NASDAQ:VA), which represents a 47% premium to the company’s Friday closing price of $38.90. Alaska Air won the bidding war for this acquisition against JetBlue. Following the news, Virgin America Inc (NASDAQ:VA)’s shares surged by approximately 40%. According to the terms of the agreement, Virgin America Inc (NASDAQ:VA) would have to pay Alaska Air $78.5 million if the agreement is terminated.
A total of 32 funds tracked by us held positions in Alaska Air Group at the end of fourth quarter 2015 having amassed 11.7% of the company’s total stock. Jim Simons’s Renaissance Technologies is one of the largest stakeholder in the company with the ownership of more than 4 million shares. At the same time, 20 investors held positions in Virgin America, which represented 33% of the company’s total stock. Among these funds, Stephen C. Freidheim’s Cyrus Capital Partners has the largest stake, containing 10 million shares at the end of 2015.
In other M&A news, networking hardware company Brocade Communications Systems, Inc. (NASDAQ:BRCD) announced today that it is going to buy Ruckus Wireless Inc (NYSE:RKUS) for approximately $1.5 billion in a cash-and-stock deal. According to the terms of the merger agreement, shareholders of Ruckus Wireless Inc (NYSE:RKUS) will receive $6.45 in cash and 0.75 shares of Brocade for each share of Ruckus. The deal values Ruckus at $14.43 per share, based on the closing prices of both companies on Friday. This would amalgamate Ruckus Wireless Inc (NYSE:RKUS)’s wireless services with the networking hardware and software business of Brocade Communication. Following the news, Brocade’s stock plummeted by 15%, whereas Ruckus’ stock soared by 30%. Brocade Communication has also raised its share buyback program by $800 million, taking the total to approximately $1.7 billion.
A total of 29 investors tracked by us held positions in Brocade with a total value of $514.5 million, which represented around 13.7% of the company stock at the end of the last year. Cliff Asness‘ AQR Capital Management owns approximately 16 million shares of the company. In Ruckus Wireless, 12 funds from our database reported stakes worth $89.1 million in aggregate. John W. Rogers’ Ariel Investments holds some 2 million shares of the company.