Here’s Why Investors Are Piling Into These Five Stocks

With the VIX fear index retreating by 6.6% today and volatility calming down a bit, investors are snapping up NGL Energy Partners LP (NYSE:NGL), Boyd Gaming Corporation (NYSE:BYD), Sientra Inc (NASDAQ:SIEN), Athersys, Inc. (NASDAQ:ATHX), and Ardelyx Inc (NASDAQ:ARDX) due to different catalysts. Let’s take a closer look at the news that sent these stocks higher on Friday.

Given that Insider Monkey has done a lot of research into what the smart money likes and doesn’t like, let’s also analyze relevant hedge fund sentiment toward the stocks. We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.

NGL Energy Partners LP (NYSE:NGL)’s shares have surged by more than 33% after the company announced that it had agreed to sell TransMontaigne GP LLC to an affiliate of ArcLight Capital Partners for $350 million in cash. TransMontaigne GP LLC is the general partner of TransMontaigne Partners L.P. and holds incentive distribution rights and 2% general partner interest in the company. NGL Energy expects to use the proceeds from the deal, which should close by the end of this month, to pay down debt, maintain growth projects, and keep its dividend stable. A total of seven funds from our database held around 0.5% of NGL Energy Partners LP (NYSE:NGL)’s shares at the end of the third quarter.

Boyd Gaming Corporation (NYSE:BYD) shareholders received some good news today as the analysts at JPMorgan upgraded the stock to ‘Overweight’ from ‘Neutral’ and bumped up their price target to $22 from $20. JPMorgan believes the casino company’s U.S. presence will beef up  its earnings as low gas prices and a strong economy send more gamblers to Boyd Gaming Corporation (NYSE:BYD)’s tables. Shares of the casino operator are up by some 6.4%.

On the next page, we examine Sientra, Athersys, and Ardelyx.
Sientra Inc (NASDAQ:SIEN) shares are 9% higher today on word that third party testers found the company’s medical implants safe and without substantial risk to patients. Sientra Inc (NASDAQ:SIEN) suspended sales of its implants in October, citing technical compliance difficulties at the company’s Brazilian contract manufacture facility. If the FDA agrees with the third party testers, the company will have its devices back on the market again. Of the around 730 elite funds we track, 10 funds owned $58.11 million worth of Sientra shares (accounting for 38.20% of the float) on September 30, versus six funds and $129.77 million, respectively, a quarter earlier.

Investors have sent Athersys, Inc. (NASDAQ:ATHX)‘s stock by more than 20% today on the news that the company entered into a partnership with Healios. Under the terms of the deal, Healios will receive exclusive rights for the development of MultiStem for treating ischemic stroke in Japan and will also get an exclusive option for development of two additional MultiStem clinical indications in Japan, including the treatment of Acute Respiratory Distress Syndrome and another indication in the orthopaedic area. In exchange, Athersys, Inc. (NASDAQ:ATHX) will receive a license fee of $15 million and is eligible for additional milestone and royalty payments based on various development and commercialization metrics.

Ardelyx Inc (NASDAQ:ARDX)‘s shares bounced back by 4% in afternoon trading after its stock cratered by more than 32% yesterday. Investors are buying because they think the big sell-off due to Ardelyx Inc (NASDAQ:ARDX)’s announcement that it will do a secondary offering of 7.5 million shares at $10 per unit is a bit over-done. Seven funds among those we track owned shares of the company at the end of September. That’s down from 10 funds a quarter earlier.

Disclosure: none