Depomed Inc (DEPO), Oracle Corporation (ORCL) & More: Why These Stocks Are Making Headlines

On the last day of the week, several stocks are in the spotlight due to potential M&A, earnings reports, trial results, and more.

In this article, we analyze match the important events with the associated stocks, Depomed Inc (NASDAQ:DEPO), Horizon Pharma PLC (NASDAQ:HZNP), Oracle Corporation (NYSE:ORCL), Novavax, Inc. (NASDAQ:NVAX), and Fiat Chrysler Automobiles NV (NYSE:FCAU) and use data from the latest round of 13F filings to see how the funds from our database were positioned towards them heading into the current quarter.

While there are many metrics that investors can assess in the investment process, the 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 to beat the S&P 500 by around 95 basis points per month (see the details here).

Ken Wolter/shutterstock.com

Depomed Inc (NASDAQ:DEPO) is in the spotlight after Reuters reported that the company is preparing to potentially sell itself. Depomed’s management, along with the help of Morgan Stanley, plans to negotiate with potential acquirers shortly after a court clarifies whether the company can retain the patent exclusivity of its best-seller Nucynta, which should occur by the end of September. By putting itself on the auction block, Depomed is caving in to activist fund manager Jeffrey Smith‘s Starboard Value Lp, who previously had asked management to unlock value by putting itself for sale.

Of the potentially interested parties, some traders think Horizon Pharma PLC (NASDAQ:HZNP) could be among the candidates. Horizon had tried to merge with Depomed before in an equity deal, which was rejected. The two companies share some similarities and the management could unlock noticeable synergies if a merger were to occur. In May 2016, a Horizon spokesman said:

“If the Depomed board chose to offer Depomed for sale, and invited Horizon to participate in the bidding, Horizon would evaluate the opportunity anew, as it would any potential acquisition.”

According to our data, the smart money is rather bullish on both companies. Of the around 750 funds that we track, 23 owned $328.2 million worth of Depomed Inc (NASDAQ:DEPO)’s stock, which accounted for 27.40% of the float on June 30, while 27 had long stakes in Horizon Pharma PLC (NASDAQ:HZNP) worth $648.36 million in aggregate, which represented 24.50% of Horizon’s float.

On the next page, we find out why Oracle, Novavax and Fiat Chrysler Automobiles NV are in the spotlight.

Oracle Corporation (NYSE:ORCL) shares are in the red after the software giant reported fiscal first quarter earnings of $0.55 per share on revenue of $8.6 billion, missing the consensus estimates by $0.03 and $100 million, respectively. Revenue inched up by 1.8% year-over-year, led by cloud SaaS and PaaS sales growth of 77% to $798 million. Short-term deferred revenues rose by 4% year-over-year to $9.5 billion. The company sees adjusted earnings of $0.59 to $0.62 for its fiscal second quarter, versus the average analyst estimate of $0.65. Natixis Global Asset Management‘s Harris Associates trimmed its stake in Oracle Corporation (NYSE:ORCL) by 6% to just over 45 million shares during the second quarter.

Novavax, Inc. (NASDAQ:NVAX)’s stock has slid by over 86% on the back of the company reporting disappointing topline data from two clinical trails testing the RSV F-protein recombinant nanoparticle vaccine candidate in older adults. While the topline data from the company’s Phase 2 rollover trial suggested improved vaccine efficacy from a second year of dosing, the topline data from the company’s more important Resolve Phase 3 trial did not meet the efficacy objectives. The failure to meet the efficacy objectives in the Phase 3 trial was enough to send some investors heading for the exits. Some of the smart money funds dodged a bullet in the second quarter. According to our data, 16 funds that Insider Monkey tracks owned shares of Novavax, Inc. (NASDAQ:NVAX) at the end of the second quarter, down by two funds from the previous quarter. Meanwhile almost a quarter of the float is short, meaning that some hedge funds likely foresaw this outcome.

Traders are talking about Fiat Chrysler Automobiles NV (NYSE:FCAU) today after the company said it is recalling around 1.9 million vehicles for potential seat belt and airbag problems that may be related to accidents that caused three fatalities and five injuries. Some of the vehicles recalled include the 2010-2014 Dodge Avenger midsize, and the 2010 Chrysler Sebring. The number of funds from our database with holdings in Fiat Chrysler Automobiles NV (NYSE:FCAU) fell by one quarter-over-quarter to 27 at the end of June.

Disclosure:None