Oil went back to tumbling on Friday, with crude oil losing more than 3.5%. On the other hand, markets returned to positive territory, with major U.S. stock indexes trading slightly up. A few stocks driving these gains include Amicus Therapeutics, Inc. (NASDAQ:FOLD), Cardiovascular Systems Inc (NASDAQ:CSII), Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Sky Solar Holdings Ltd (ADR) (NASDAQ:SKYS), and Micron Technology, Inc. (NASDAQ:MU), all of which are on the rise. So, let’s take a look into the events that pushed these stocks higher and see what the funds in our database think about the companies in question.
While there are many metrics that investors can assess in the investment process, hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).
Back to the stocks that interest us, let’s start with Amicus Therapeutics, Inc. (NASDAQ:FOLD), which is up almost 4% on Friday trading. The surge was driven by the announcement that the European Committee for Medicinal Products for Human Use (CHMP) assumed a positive opinion to approve migalastat, an oral small molecule pharmacological chaperone, as a first line therapy for Fabry disease – for patients with amenable genetic mutations. The company expects a final decision from the European Commission in the second quarter of the year. If/when approved, the company will start a country-by-country reimbursement processes.
Among the hedge funds that we track, 23 were long Amicus Therapeutics, Inc. (NASDAQ:FOLD) by the end of the fourth quarter. Their combined staked accounted for 39.2% of the company’s shares outstanding. The largest stake in our database was that held by Joseph Edelman’s Perceptive Advisors, which last reported holding 15.23 million shares of the company as of February 16.
Next up is Cardiovascular Systems Inc (NASDAQ:CSII), whose stock is trading up more than 26.5%, responding to the announcement of the company’s fiscal third quarter (calendar first quarter) preliminary results. Management said revenue should come in at the $43.5 million-to-$44 million range, which is between 4% and 5% higher than the previous guidance. In addition, the company said it was implementing a restructuring plan, aimed at reducing operating costs, which includes an 8% reduction in its workforce. Furthermore, analysts at Needham upgraded the stock on Friday morning, to ‘Buy’ from ‘Underperform’.
As of the end of the fourth quarter of 2015, Cardiovascular Systems Inc (NASDAQ:CSII) had the support of nine funds in our database, which held 14% of its total shares. Among them, we could highlight Robert G. Moses’ RGM Capital, which disclosed ownership of 1.32 million shares, worth almost $20 million on December 31.
As investors have become accustomed, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is on the move once again. However, the shares are surging (trading up about 8.7%) on Friday, even though bad news continue to surface. On late Thursday, Moody’s Investors Service once again downgraded its ratings on the company’s junk debt – from B1 to B2, after the CEO was replaced, and Bill Ackman was added to the Board. However, it looks like the event driving the stock price up was a regulator’s order for the company’s management to cease trading. On Thursday, Valeant’s directors (including Ackman) and key officers received a cease-trade order from Quebec’s securities regulator, which bars them from trading shares over the next 15 days. The state authority said it would extend the ban if the company does not file its financial results by April 15.
Bill Ackman’s Pershing Square is one of the largest shareholders of record at Valeant Pharmaceuticals Intl Inc (NYSE:VRX). The fund last disclosed a 9% stake in the company, which comprises about 30.71 million shares. In addition to Pershing Square, 82 other funds in our database were long Valeant at the end of the fourth quarter, with their combined stakes accounting for more than a third of the company’s total shares. Another major institutional investor of is Jeffrey Ubben’s ValueAct Capital, which held 14.99 million shares of the company by December 31.
A big gainer on Friday is small cap independent power producer Sky Solar Holdings Ltd (ADR) (NASDAQ:SKYS), whose stock has more than doubled today, after posting an 83.74% gain on Thursday. The spike surprised many investors, as the company missed estimates for its fourth quarter on Wednesday evening; a net loss of $0.02 per share fell $0.05 below estimates, while revenue of $12.2 million missed expectations by $3.65 million. The stock might be gaining ground on the back of investors’ confidence in the company’s pipeline, which was characterized by CIO Sanjay Shrestha as “one of the largest pipelines in the solar industry [which is, in addition,] coupled with a sizable operating portfolio that carries very limited debt.”
Sky Solar Holdings Ltd (ADR) (NASDAQ:SKYS) is not very popular among institutional investors. At the end of the fourth quarter, only four major investment firms (and no hedge funds) were long the stock. However, on February 12, Thomas Steyer’s Farallon Capital Management disclosed a new stake in the company, comprising 163.46 million shares; this positions makes it the largest shareholder of record.
Finally, there’s Micron Technology, Inc. (NASDAQ:MU), whose stock has gained more than 3% on Friday, extending the performance after the company reported a narrower-than-expected net loss for the last quarter. The company delivered a net loss of $0.05 per share, beating consensus estimate by $0.03, but the revenue of $2.93 million missed estimates by $120 million.
Among the funds that we track, 64 were long Micron Technology, Inc. (NASDAQ:MU) at the end of 2015, having amassed 8.6% of the company’s total shares outstanding. The largest positions were owned by mutual funds and other institutional investors. However, a hedge fund with a sizable stake was Peter Rathjens, Bruce Clarke And John Campbell’s Arrowstreet Capital, which last declared holding 16.48 million shares, worth roughly $233 million.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.