Squashed Takeovers And Positive Test Results Propelling These Stocks Higher

Synaptics, Incorporated (NASDAQ:SYNA) is a much less popular stock among the elite hedge funds we track, which held just 5.70% of the human interface solutions provider’s shares, and their sentiment towards the stock during the second quarter was relatively flat. 22 funds held $181 million in shares on June 30, down by one fund but up by about $16 million respectively, from March 31, the latter figure of which was about in-line with the growth of the stock during the quarter. Despite seemingly positive fiscal 2015 fourth quarter results released at the end of July, shares trended down throughout August as investors appeared worried about the firm’s high P/E of about 28, despite a forward P/E that only sits around 10.

The stock got a 26% shot in the arm today however after it was revealed that the firm turned down a $110-per-share offer from a group of Chinese investors, which amounted to a 70% premium as of yesterday’s close. Bloomberg reported that the talks were ongoing, and that Synaptics may be holding out for as much as $125 per share. Despite the potential for a big payday, there is the possibility that the sale of the company to a Chinese group would need regulatory approval.

Seymour Sy Kaufman and Michael Stark’s Crosslink Capital and Mark Kingdon’s Kingdon Capital are two of the hedge funds we track which would likely be very pleased with a $125 per share sale of the company. The funds owned 438,383 shares and 270,723 shares of Synaptics, Incorporated (NASDAQ:SYNA) respectively.

Lastly is Depomed Inc (NASDAQ:DEPO), a pharmaceutical company which is also the subject of a proposed takeover, and which has also shot down said takeover. In a statement released today, Depomed reiterated that Horizon Pharma PLC (NASDAQ:HZNP)’s offer, initially made last month, undervalues the company, and that the all-stock hostile takeover offer is also substantially less valuable than it once was. Depomed called out Horizon Pharma for still touting the deal as being worth $33 per share, given the sharp decline in Horizon’s shares over the past month. The proposed deal to Depomed’s shareholders of 0.95 Horizon shares for each Depomed share would now be worth less than one-third of that.

Given that, Roth Capital today cut its price target on Depomed Inc (NASDAQ:DEPO) to $21 from $33, citing the shattered value of the proposed takeover, while nonetheless rating the company a ‘Buy’ as a standalone entity. Shares are up by 19% today to $18.48 in afternoon trading. Horizon Pharma PLC (NASDAQ:HZNP)’s shares are also having a strong showing today, up by over 18%.

Hedge funds in our database would have a lot of say on any hostile takeover, as they owned 15.60% of Depomed’s shares on June 30, led by Richard Mashaal’s RIMA Senvest Management with 3.87 million shares. 22 hedge funds in our database held $202 million worth of the company’s shares on June 30, down from 25 funds holding $224 million in shares on March 31. Israel Englander’s Millennium Management was one of the funds to close its position in Depomed during the second quarter, one which had previously consisted of over 667,000 shares.

Disclosure: None