It’s been a quiet morning on Wall Street so far, with the Dow and S&P coming out flat out of the gate and the NASDAQ Composite index up just 14 points. Among the stocks showing more volatility than the indexes are XenoPort, Inc. (NASDAQ:XNPT), American Capital Ltd. (NASDAQ:ACAS), Ares Capital Corporation (NASDAQ:ARCC), Statoil ASA (ADR) (NYSE:STO), and Seadrill Ltd (NYSE:SDRL). Let’s find out why traders are buying and selling and use the latest round of 13F filings to see what smart money investors think about these stocks.
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).
XenoPort Surges 56% on Buyout
It will soon be the end of the road for XenoPort, Inc. (NASDAQ:XNPT) as a public corporation after the company recently agreed to sell itself to Arbor Pharmaceuticals for $7.03 in cash per share or around $467 million. Arbor is a specialty pharmaceutical company focused on the cardiovascular, hospital and pediatric markets. Arbor has over 600 workers, including 500 sales people promoting its drugs and devices to doctors, hospitals and other healthcare workers. Arbor’s acquisition of XenoPort should close in the third quarter of 2016. Out of the 766 total funds in Insider Monkey’s database, 14 funds owned over 44% of XenoPort, Inc. (NASDAQ:XNPT)’s shares at the end of March.
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An Acquisition in Finance Sector
American Capital Ltd. (NASDAQ:ACAS) is up by 1.6% and Ares Capital Corporation (NASDAQ:ARCC) is 2.8% in the red after Ares Capital agreed to buy American Capital for $3.43 billion in cash and stock, or roughly $14.95 per share using last week’s closing prices. The boards of both companies have unanimously approved the transaction. For Ares Capital, the deal is expected to be immediately accretive to EPS, accretive to net asset value between the first and second full years after closing, and accelerate growth of Ares Capital’s Senior Direct Lending Program joint venture. In a separate deal, American Capital also announced that it is selling American Capital Mortgage Management, LLC to American Capital Agency Corp for $562 million or $2.45 per fully diluted share. A total of 33 funds held shares of American Capital Ltd. (NASDAQ:ACAS) and 19 investors were long Ares Capital Corporation (NASDAQ:ARCC) at the end of March.
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Follow American Capital Ltd (NASDAQ:ACAS)
Follow Ares Capital Corp (NASDAQ:ARCC)
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On the next page, we examine Statoil ASA (ADR) and Seadrill Ltd.
Another Blow For Seadrill after Statoil Cancels Rig Contract
Seadrill Ltd (NYSE:SDRL) shares are down 4% in morning trading after news broke that Statoil ASA(ADR) (NYSE:STO) canceled an offshore contract for a drilling rig, the West Hercules, which was originally contracted for drilling in Norway. Due to the termination, Seadrill Ltd (NYSE:SDRL) will receive a lump sum payment of $61 million plus some additional compensation for the demobilization of the rig. Seadrill is now actively looking for new work for the rig. Activity in the offshore drilling market has cooled off substantially since Brent prices have more than halved from their 2014 highs. Although Brent has rallied in recent months, the offshore drillers will need considerably higher prices to see offshore activity pick up again. Also hurting Seadrill and Statoil ASA (ADR) (NYSE:STO) (whose shares are down around 1%) are lower crude prices as traders take profits. Among the funds we track, seven funds owned $71.65 million worth of Statoil ASA (ADR) (NYSE:STO) shares, which accounted for 0.10% of the oil giant’s float on March 31, while 22 funds owned $110.83 million worth of Seadrill Ltd (NYSE:SDRL), equal to 6.80% of its float.
