Here’s Why These Five Stocks Are Advancing on Monday

The US market is trading up on Monday, following European markets, which spiked up on news about new polls showing that support for Brexit has fallen, and more people are now behind the idea of the UK remaining a member of the European Union.

Among the US-traded stocks that are surging on Monday are Marathon Oil Corporation (NYSE:MRO), Freeport-McMoRan Inc (NYSE:FCX), Caterpillar Inc. (NYSE:CAT), Globalstar, Inc. (NYSEMKT:GSAT) and Lpath, Inc. (NASDAQ:LPTN). So, let’s take a look into the events behind the move of these stocks, and into what the hedge funds in our database think about the companies in question.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

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Marathon Oil To Acquire PayRock Energy

Let’s start with Marathon Oil Corporation (NYSE:MRO), whose stock has gained around 9.6% on Monday afternoon after the company announced it will acquire PayRock Energy Holdings from venture capital firm EnCap Investments, for $888 million. The move will allow to “expand the quality and scale of Marathon Oil’s existing portfolio in one of the best unconventional oil plays in the U.S. [Oklahoma],” Marathon’s CEO Lee Tillman explained.

Among the funds we track, 33 were long Marathon Oil Corporation (NYSE:MRO) at the end of the first quarter of 2016, up from 27 in the previous quarter. Among the newcomers were Stuart J. Zimmer’s Zimmer Partners, which acquired more than 14 million shares (or about $156 million in stock) during the first quarter, and Israel Englander’s Millennium Management, which initiated a stake comprising 10.33 million shares over the January-March period.

Freeport-McMoRan Up On Oil Rebound

Next up is Freeport-McMoRan Inc (NYSE:FCX), which is up by almost 6% today, helped by a rebound in oil prices, which rose more than 2% on Monday, with July contracts getting close to $50 a barrel. As of the end of the first quarter, 34 funds in our database are long Freeport-McMoRan Inc (NYSE:FCX), down from 37 funds a quarter earlier. As it is widely known, Carl Icahn’s Icahn Capital LP owns the largest stake among institutional investors; the firm last disclosed ownership of 104 million shares, worth more than $1 billion by March 31.

On the next page we will look into three more large gainers.

May Retail Machine Sales Help Caterpillar

Shares of Caterpillar Inc. (NYSE:CAT) have inched up by 1.1% on Monday, following the report of the company’s May retail machines sales. Management said that over the month, retail machines sales tumbled by 12% year-over-year, driven by a 27% decline in resource segment and an 8% slip in construction segment. While still not good, these figures imply a stable or a decelerating trend when compared to the previous month. Caterpillar Inc. (NYSE:CAT) saw the number of hedge funds in our database long its stock increase by more than 19% over the first quarter to 37. Among the largest hedge fund shareholders were Harris Associates, with 15.14 million shares, and the Bill & Melinda Gates Foundation Trust, managed by Michael Larson, which last disclosed ownership of 11.26 million shares, or almost $862 million in stock as of March 31.

Globalstar’s TLPS Could Get FCC Approval Soon

Another gainer on Monday trading is small-cap Globalstar, Inc. (NYSEMKT:GSAT), whose stock has appreciated by around 11% amid reports that oil giant Shell has selected Globalstar as the provider of satellite-based asset tracking for its onshore and offshore assets in the Netherlands. In addition, a recent Height Securities report has stated that the FCC will likely approve the company’s TLPS spectrum by June 30. For a small-cap stock, Globalstar, Inc. (NYSEMKT:GSAT) is pretty popular among the funds in our database, with 15 funds having amassed nearly 11% of its stock at the end of March. Among them, we could highlight Michael Johnston’s Steelhead Partners, which held 32.5 million shares and Jamie Zimmerman’s Litespeed Management, with 20.9 million shares, held as of the end of March.

Government Grant Salvages This Embattled Nano Cap

Finally, there’s nano-cap biotech Lpath, Inc. (NASDAQ:LPTN), which is up by 58% on Monday, after it was announced that the company received a government grant to develop its lead pain treatment, Lpathomab. Interestingly, it seems like the grant came at just the right time: last week, the company was compelled to enact a 1-for-14 reverse stock split in order to maintain a high-enough stock price to remain listed on NASDAQ. Only three funds in our database were long Lpath, Inc. (NASDAQ:LPTN) at the end of the first quarter, the largest stake being held by Hal Mintz’s Sabby Capital, with 1.1 million shares (79,062 shares split-adjusted).

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