Premiere Global Services, Inc. (NYSE:PGI) and KaloBios Pharmaceuticals Inc (NASDAQ:KBIO) have qualified as the top market movers of the day, jumping 21.7% and 7.1%, respectively. Let us find out the primary reasons behind their rally and the hedge fund sentiment surrounding these stocks.
Premiere Global Services, Inc. (NYSE:PGI) has received a $1 billion buyout offer from Siris Capital Group LLC, a private-equity firm. The firm announced getting into a definitive agreement with Siris Capital, which will pay $14.00 per share for all the outstanding common stocks of the company, representing a premium of 23% over its last closing price. Following the merger agreement, Premiere Global Services, Inc. (NYSE:PGI) will initiate its search for other superior proposals during the 45-day “go-shop” period. In case of a superior offer available in the market, Siris Capital will have the right to match it. Prior to the offer from Siris Capital, the stock of Premiere Global Services had an average rating of “buy” from two analysts, with short-term price target of $12.5 per share.
The shares of Premiere Global Services returned 31.02% year-to-date and it is trading in large volume after the announcement, including 6.74 million shares exchanging hands at 11:08 am against daily average of 355,340 shares. Premiere Global Services, Inc. (NYSE:PGI) announced its second quarter 2015 financial results on July 30, beating the Wall Street’s revenue and earnings estimates with reported revenue of $144.3 million accompanied by non-GAAP diluted EPS of $0.26. The market was expecting revenues of $143.6 million with earnings per share of $0.23. It seems as if the smart money had an intuition regarding a major management change in Premiere Global Services, Inc. (NYSE:PGI), as the hedge funds in our database increased their aggregate holdings by 21.50% to $25.43 million against the first quarter. However, the number of hedge funds holding positions in the company dropped by two to 14. The shares of collaboration software company rose 7.64% during the second quarter, boosting overall hedge fund holdings. Royce & Associates, led by Chuck Royce, and Park West Asset Management, led by Peter S. Park, were the primary shareholders of the company, holding 601,500 and 466,009 shares, respectively. Millennium Management and Arrowstreet Capital trimmed their stake in the company, ending the quarter with 250,775 and 184,241 shares, respectively. Gotham Asset Management and Legg Mason Capital Management were among hedge funds disposing off their entire stake in the company.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 118% and beating the market by more than 60 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
KaloBios Pharmaceuticals Inc (NASDAQ:KBIO) is another stock soaring during the early trading hours. The biopharmaceutical company has seen a rebound in the past few days, with its shares improving 88.21% in September alone. The shares of KaloBios Pharmaceuticals Inc (NASDAQ:KBIO) have declined 69.21% year-to-date, following company’s failed phase 2 study of KB001-A released in January. The prescription medicine was targeted towards the treatment of pseudomonas lung infections in cystic fibrosis patients.
According to Zacks Research, KaloBios Pharmaceuticals Inc (NASDAQ:KBIO) has an average rating of “hold” from three analysts. The pharmaceutical company reported its second quarter 2015 financial results on August 10, with net loss of $6.00 million or $1.46 per share. Some of the ongoing development programs of the clinical-stage biopharmaceutical company include KB004 Immunon-oncology program for EphA3 and KB003 Oncology program for treatment of chronic myelomonocytic leukemia (CMML). KaloBios Pharmaceuticals Inc (NASDAQ:KBIO) announced clearance of Investigational New Drug Application for KB003 from the U.S. Food and Drug Administration (FDA) on July 29. Among the hedge funds that we track at Insider Monkey, Jim Simons’ Renaissance Technologies had 564,673 shares of the biopharmaceutical company in its portfolio at the end of the second quarter. Millennium Management and Biotechnology Value Fund were among hedgies disposing off their entire stake in the medical company.
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