We recently published a list of 20 Takeover Rumors Hedge Funds Are Buying. In this article, we are going to take a look at where Nuvalent, Inc. (NASDAQ:NUVL) stands against other takeover rumor stocks hedge funds are buying.
Hedge funds tend to pile up on a stock that gains or is expected to gain positive attention in a market. And what more could ignite such a frenzy of activity other than whispers of potential takeovers? When combined with subtle market signals and insider movements, these rumors can cause investors to purchase the stock. Income-seeking investors usually keep a close eye on such signs and movements to capitalize on emerging opportunities.
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In particular, hedge fund managers, using their vast resources and analytical capabilities, are more receptive to such speculative cues and act upon them. Since investors and the rest of the market tend to generate income by closely following their actions, hedge funds hold influential power in market trajectories.
The allure of these rumors lies in their potential to generate substantial returns to shareholders. Those companies that become the target of a takeover or are perceived as a target experience a stock value surge in the market, thus attracting further investor interest. To stay ahead of the curve, hedge funds conduct thorough analyses, including financial statement evaluations, industry trend monitoring, and management behavior assessments, to predict the possibility of such events. Such a proactive approach, in addition to giving them an edge over other investors in the market, also contributes to the evolving nature of financial markets.
What prompts the takeover rumors? Loads of factors. In the current environment, as we all know, the new tariff rates and trade wars are the biggest and most significant catalysts for takeover rumors. However, hedge funds also take note of other factors when anticipating a takeover. For instance, the Federal Reserve cut interest rates. After a series of cuts that started in September, the Fed has paused the interest rate adjustments and maintained them between 4.25% and 4.50% since December 2024. The range is not historically low, compared to the near 0% interest rates the Fed announced amid the COVID-19 pandemic. However, larger companies may find it easier and less expensive to fund an acquisition or merger at the current interest levels.
On the other hand, the broader market sentiment could also play a vital role in takeover rumors. The expected takeover might get rescheduled or withdrawn, depending on the favorability of the market sentiment. For instance, the recent falls in the stock market might reflect negatively on the market sentiment, discouraging companies from risking an acquisition or takeover.
Meanwhile, with their keen insights, hedge funds attempt to identify undervalued assets and potential takeover candidates. In addition to reflecting confidence in market resilience, their actions signify the importance of timely and informed decision-making.
Our Methodology
We have put together our list by following a specific and straightforward methodology. Primarily, we have identified stocks with takeover rumors that have started or advanced in the past year. All the data used in this regard was taken from financial news, databases, and analyst reports, with all information updated as of April 21, 2025. This criterion is in place to ensure the relevance of the rumor with the hedge fund holdings for a stock. We have also collected information on the hedge fund holdings as of April 21, 2025, from the Insider Monkey database of Q4 2024. Based on this data, we have ranked our picks from 20 to 1, with 20 being the stock with the least number of hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A physician standing in a lab, with vials of biopharmaceuticals in hand.
Nuvalent, Inc. (NASDAQ:NUVL)
No. of Hedge Funds: 50
Based in Massachusetts, a clinical-stage biopharmaceutical company, Nuvalent, Inc. (NASDAQ:NUVL) is focused on developing targeted therapies for cancers driven by oncogenic kinase alterations. Its pipeline includes novel ROS1-, ALK-, and HER2-driven tumor inhibitors, emphasizing CNS penetration. The company acquires a competitive advantage with structure-based drug design and strategic partnerships. The unmet needs in precision oncology support the company’s address of resistance mutations in existing therapies.
Nuvalent, Inc. (NASDAQ:NUVL) sees its takeover rumors rise in 2025, following the appointment of its new board member, Grant Bogle. Grant has 40 years of experience in the biotech industry and has taken the position of CEO of Epizyme, which was acquired in 2022. Nuvalent, Inc. (NASDAQ:NUVL) also attracts potential acquirers with its $1.2 billion cash runway into 2028. Additionally, the company is scheduled to introduce its first targeted cancer treatment in 2026. Though no names have been provided by the experts, analysts, and the company itself regarding the potential buyer, the appointment of M&A expertise, the company’s robust pipeline, and its strong financial position increase the possibility of a takeover.
Adding value to this rumored takeover, 50 hedge funds are backing the company’s stock, as per Insider Monkey’s Q4 2024 database. The hedge funds reflect strong institutional confidence in the company’s future progress, including its potential takeover.
Overall, NUVL ranks 8th on our list of takeover rumor stocks hedge funds are buying. While we acknowledge the potential of NUVL, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks have lost around 25%. If you are looking for an AI stock that is more promising than NUVL but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
