Four Stocks Driving Thursday’s Market Gains: How Did They Do It?

In the first eight days of the year, the S&P 500 index fell by roughly 7.5%, the Dow lost 7.3%, and the NASDAQ tumbled by 9.6%. However, the markets have started to recuperate today, with all three indexes up by more than 1.5%. A few stocks driving these surges are Bill Barrett Corporation (NYSE:BBG), Kindred Healthcare, Inc. (NYSE:KND), Neurocrine Biosciences, Inc. (NASDAQ:NBIX) and Scorpio Bulkers Inc (NYSE:SALT), all of which have registered substantial gains in today’s trading session. So let’s take a look into why these stocks are spiking and into what the funds in our database think about those companies.

At Insider Monkey, we track around 730 hedge funds and 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 the details of our small-cap strategy here).

Back to the day’s big gainers, let’s start with Bill Barrett Corporation (NYSE:BBG), which is up by more than 7.5% today after hitting a 52-week low yesterday. The surge was framed in the context of a general rise in energy stocks as the price of Brent Crude climbed by more than 2.3% and the price of WTI Crude increased by more than 2.5%.

Moreover, it seems like the hedge funds in our database are becoming increasingly positive about the company. Among the funds that we track, 16 disclosed long stakes in Bill Barrett Corporation (NYSE:BBG) as of the end of the third quarter of last year, up by 6.6% quarter-over-quarter. In fact, the largest hedge fund investor of record in our files, Ken Griffin’s Citadel Investment Group, boosted its position by 35% over the quarter, and held about 1.2 million shares as of September 30.

Up next is Kindred Healthcare, Inc. (NYSE:KND), which is trading up by 13.7% in the afternoon hours. Same as Bill Barrett Corporation (NYSE:BBG), Kindred Healthcare, Inc. (NYSE:KND) hit a 52-week low on Wednesday, and closed that day’s trading session down by 5.77%. Thus, today’s surge looks like little more than a rebound, in tandem with the wider market.

For a small-cap company, Kindred Healthcare, Inc. (NYSE:KND) counts plenty of hedge fund backers. 35 of the funds in our database disclosed being long the stock as of the end of the third quarter – up from 32 following the prior one. Their holdings, combined, accounted for more than 30% of the company’s total shares. The largest stake was held by Conan Laughlin’s North Tide Capital, which disclosed ownership of 5.0 million shares worth more than $78 million.

On the next page, we will take a look into the events driving the spikes in Neurocrine Biosciences, Inc. (NASDAQ:NBIX) and Scorpio Bulkers Inc (NYSE:SALT) today.

Neurocrine Biosciences, Inc. (NASDAQ:NBIX) has been another big gainer in Thursday trading, up by over 15.3%. Over 2015, the stock gained 148.44%. However, it started 2016 with the left foot, losing 26% in the first eight trading days. As such, Thursday’s rise seems to be a correction of this steep decline.

Same as in the two cases cited above, hedge funds’ interest in Neurocrine Biosciences, Inc. (NASDAQ:NBIX) rose, by 16%, over the third quarter of 2015. Among the 36 funds with long stakes in the company, Samuel Isaly’s Orbimed Advisors held the largest, comprising roughly 3.81 million shares, worth more than $151 million.

Finally, there’s Scorpio Bulkers Inc (NYSE:SALT), up by about 23.5% this afternoon, after plummeting by 69.57% in the first eight trading days of the year. Similar to its peers above, the stock hit a 52-week low on Wednesday, and started to recuperate today, as the markets rebounded in general.

However, unlike its aforementioned peers, Scorpio Bulkers Inc (NYSE:SALT) saw hedge fund interest decline over the most recently reported quarter. After a 27% tumble, the number of hedge funds long the stock stood at 16. However, those funds held more than 46% of the outstanding shares. Michael Weinstock’s Monarch Alternative Capital held the largest position, comprising 3.26 million shares, worth over $57 million.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned in this article.