Here’s Why Traders Are Piling Into These Five Stocks

All three major indexes are in the green today as investors look forward to today’s FOMC meeting decision. Among the stocks that are also in bull-mode are Catalyst Pharmaceuticals Inc (NASDAQ:CPRX), Capital Bank Financial Corp (NASDAQ:CBF), Msci Inc (NYSE:MSCI), Finisar Corporation (NASDAQ:FNSR), and Whiting Petroleum Corp (NYSE:WLL). Let’s find out why traders are hitting the buy button on each stock and use the latest 13F data to determine how hedge funds were positioned among them in the fourth quarter.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

Wall Street Bull

Catalyst Pharmaceuticals Inc (NASDAQ:CPRX) leads today’s gainers, having rallied over 30% from yesterday’s close. Traders are buying due to Catalyst disclosing that its experimental drug, Firdapse, yielded positive top-line results from an investigator-sponsored “proof-of-concept” trial. Firdapse is a potential treatment for patients with a severe type of myasthenia gravis. In terms of smart money sentiment, 7 elite funds had a bullish position in Catalyst Pharmaceuticals Inc (NASDAQ:CPRX) at the end of the fourth quarter, up 2 funds from the previous quarter. That’s out of around 742 top funds in our database.

Capital Bank Financial Corp (NASDAQ:CBF) shares have popped 8% after Bloomberg reported that the bank is working with financial advisers on a potential sale. Capital Bank management began the process after the company received an unsolicited approach. According to the article, the talks about a potential sale are at ‘an early stage’. The number of elite funds with holdings in Capital Bank Financial Corp (NASDAQ:CBF) rose by 7 quarter-over-quarter to 14 at the end of December.

On the next page, we examine Msci Inc, Finisar Corporation, and Whiting Petroleum Corp.

Msci Inc (NYSE:MSCI) surged earlier in the session due to an Evening Standard article that said its sources speculate that S&P Global might be ‘plotting an audacious $11 billion (£9 billion) takeover of MSCI’. According to the article, the purported $120 per share offer wasn’t enough and management was looking for $130 per share. Later Msci shares fell when the company released a statement denying the rumors:

We do not normally comment on rumors in the market, but in response to recent media reports regarding third party interest in MSCI, we believe such reports are incorrect. We are not in discussions with any third party, and we have not received any offer or indication of interest.

Shares of Msci are nevertheless still in the green as of early afternoon trading. 20 top funds owned shares of Msci Inc (NYSE:MSCI) as of the most recent 13-F reporting period, down 4 funds from the previous quarter.

Finisar Corporation (NASDAQ:FNSR) is well in the green as the entire optical sector bounces back. Sentiment around the name received a boost from James Kisner of Jefferies, who upgraded the equity to ‘Buy’ from ‘Hold’. Kisner likes Finisar’s ‘compelling valuation’ and potential for accretive M&A. The analyst has a $34 price target, up from the previous $32. 27 top funds were long Finisar Corporation (NASDAQ:FNSR) as of the most recent 13-F reporting period.

Whiting Petroleum Corp (NYSE:WLL) shares are 4% in the green on the back of higher crude prices. Today’s EIA report was better than expected, and inventories are no longer surging faster than expectations. Given Whiting’s debt profile and ambitious capex spend for 2017, the stock is highly sensitive to crude price changes. The number of elite funds with holdings in Whiting Petroleum Corp (NYSE:WLL) fell by 1 quarter-over-quarter to 34 at the end of December.

Disclosure:None