Here’s Why Traders Are Piling Into These Five Stocks

Although the three major indexes are only up modestly as investors remain cautious in light of Alcoa’s soft earnings report yesterday, shares of five companies are bucking the trend and making big upward moves today.

In this article, we’ll analyze why traders are piling into InspireMD Inc (NYSEMKT:NSPR), SolarCity Corp (NASDAQ:SCTY), Blackhawk Network Holdings Inc (NASDAQ:HAWK), VOXX International Corp (NASDAQ:VOXX), and Sprint Corp (NYSE:S) this morning and use the latest 13F filings to check hedge fund sentiment towards each of these names.

At Insider Monkey, we track around 750 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 here).

Wall Street Bull

Technical trading is alive and well today, as shares of nano-cap InspireMD Inc (NYSEMKT:NSPR) have surged by over 30% in morning trading on the back of no fundamental news. Making today’s momentum speculation possible was a 1-for-25 reverse stock split on Monday to push the stock above the $1 per share mark. Those shares have since soared by 57% to $3.18. According to our data, not many hedge funds held shares of InspireMD at the end of the second quarter. Of the 749 hedge funds that we track which filed 13Fs for the June quarter, just two were long InspireMD Inc (NYSEMKT:NSPR) on June 30, owning just $66,000 worth of its shares, well down from four funds with $467,000 in InspireMD holdings on March 31.

SolarCity Corp (NASDAQ:SCTY) shares are 2% in the green after Tesla Motors Inc (NASDAQ:TSLA) set a special meeting for November 17, so that its shareholders can vote on the merger between it and SolarCity. Although many analysts and investors don’t like the deal, the market isn’t ruling out an approval. Shares of SolarCity trade for around $19.74 per share, not far from the $22.22 per share figure that the deal would currently pay shareholders should Tesla receive approval to buy the company (the deal’s terms stipulate that each SolarCity share will be bought with 0.11 Tesla shares, which are currently trading for around $202). 26 funds that we track were long SolarCity Corp (NASDAQ:SCTY) at the end of the second quarter, up by three funds quarter-over-quarter.

On the next page we’ll find out why Blackhawk Network Holdings, VOXX International, and Sprint are surging today.

Blackhawk Network Holdings Inc (NASDAQ:HAWK) shares have surged by 7.8% after the company reported third quarter earnings of $0.14 per share on revenue of $361.6 million for its third quarter of 2016. Those numbers represent a mixed bag compared to the $0.17 per share in earnings and $352.7 million in revenue that the company managed for the third quarter of 2015. In terms of guidance, Blackhawk’s management expects 2016 adjusted diluted EPS coming in at $1.45-to-$1.64, and adjusted EBITDA clocking in at $200 million-to-$218 million. Adjusted operating sales are anticipated to be between $897 million and $926 million. 22 funds tracked by Insider Monkey owned $335.3 million worth of Blackhawk Network Holdings Inc (NASDAQ:HAWK) shares on June 30, which accounted for 17.80% of the float.

Nano-cap VOXX International Corp (NASDAQ:VOXX) has surged by 28.4% today after the company reported fiscal 2017 second quarter earnings of $0.12 per share on revenue of $159.3 million. That compares to a loss of $0.18 per share on sales of $154.2 million for the comparable period of the company’s 2016 fiscal year. Adjusted EBITDA was $6.9 million, up from $4.8 million in the comparable period. CEO Pat Lavelle said:

“We reported year-over-year growth during the second quarter and remain on track to drive growth in our business this Fiscal year. While our Automotive segment is expected to be down slightly, most of it is timing related and we have new programs slated to begin towards the end of our Fiscal year. We were also awarded another $45 million in new contracts during the second quarter, bringing the total value of OEM awards received over the past three quarters to approximately $380 million.”

As with all nano-caps, due diligence should be done on both sides of the trade. Nine funds in our system owned shares of VOXX International Corp (NASDAQ:VOXX) at the end of the second quarter.

Sprint Corp (NYSE:S) is 1.2% in the green after the company announced a private placement offering of wireless spectrum-backed notes of up to $3.5 billion. The cash raised will help Sprint’s liquidity position. Shares of the telecom are up by 87% year-to-date. Mario Gabelli‘s GAMCO Investors reported holding a long stake of over 1.7 million shares in Sprint Corp (NYSE:S) as of the end of June.

Disclosure: None