What’s the Deal With These Surging Stocks Amid Today’s Gloomy Market?

U.S stocks did not spend too much time in green territory today, heading south soon after the opening bell. The culprits are the same as in recent days: poor economic data from China and falling oil prices. Nevertheless, there are some stocks that have gone against the grain and are posting significant gains today. Let’s find out what is the reason for today’s advance in the shares of Knowles Corp (NYSE:KN), Sagent Pharmaceuticals Inc (NASDAQ:SGNT), Fiesta Restaurant Group Inc (NASDAQ:FRGI) and Acorn International, Inc. (ADR) (NYSE:ATV). We’ll also look at the latest hedge fund ownership data and trends involving these stocks.

Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market (read the details). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).

Shares of Knowles Corp (NYSE:KN) have jumped today after the company announced preliminary results for the three months ending December 31, 2015. According to a press release, Knowles Corp expects fourth-quarter revenue of $310 million, compared with previous estimates of $290 million-to-$310 million. The company also said it expects its margin to vary between 32% and 34%, while its adjusted EBIT margin is expected to be roughly 8%-to-9%, at the higher end of previous projections. Shares of Knowles Corp are currently trading up by more than 4% today.

The fan club of Knowles Corp (NYSE:KN) lost a few members over the third-quarter among those investors that we are fans of, with the number of top hedge funds invested in the stock dropping to 13 by the end of September, from 16 at the end of June. David Goel and Paul Ferri‘s Matrix Capital Management holds the largest position in the stock among those 13 funds, having reported ownership of 3.53 million shares in its latest 13F filing, up by 32% over the quarter.

Investors are pushing Fiesta Restaurant Group Inc (NASDAQ:FRGI) higher in anticipation of the company’s presentation at the ICR Conference today. Shares have surged by as much as 10% before taking a breather and settling around the $36.50 level. A host of other restaurant companies are set to take the stage today, with Chipotle Mexican Grill, Inc. (NYSE:CMG)’s presentation expected to be the main attraction. Analysts will be looking for clues related to restaurant traffic over the holiday season and whether there was a significant impact on the companies’ bottom lines.

At the end of September, a meager 3% of Fiesta Restaurant Group Inc (NASDAQ:FRGI)’s common stock was held by 18 elite funds in our system, up from 17 a quarter earlier. Israel Englander is among those optimistic about the prospects of the company, having increased his holding of the stock by 168% over the third-quarter to 120,880 shares.

Sagent Pharmaceuticals and Acorn International are put under the spotlight on the following page.

Sagent Pharmaceuticals Inc (NASDAQ:SGNT)‘s stock is surging today on reports that the company is looking to sell itself. Sagent is working with Perella Weinberg Partners to identify the best course of development and reports have emerged that the investment bank has been in contact with other companies and equity firms, as it pitches a sale. Sagent’s stock performed poorly in 2015, losing roughly 37% of its value over the year, and has continued the slide early this year.

Hedge funds sought to reduce their exposure to Sagent Pharmaceuticals Inc (NASDAQ:SGNT) during the third-quarter, with the number of reported long positions dropping to ten, from 18 a quarter earlier. Arthur B Cohen and Joseph Healey are bullish on the stock, having increased their investment by 38% during the quarter. Their fund, Healthcor Management LP, held 1.25 million shares of Sagent at the end of September, then valued at $19.2 million.

The frenzy surrounding Acorn International, Inc. (ADR) (NYSE:ATV) has not faded yet, as the stock jumped by more than 20% today. Shares are surging for a third consecutive day on news of a new share repurchase program. The company announced a buyback program on Monday morning of up to $2 million worth of American Depository Shares, sending the stock up by 116% by the end of the trading day.

Only two of the funds we follow reported a stake in Acorn International, Inc. (ADR) (NYSE:ATV) as of September 30, namely Neon Liberty Capital Management, run by Satyen Mehta, and Ken Griffin‘s Citadel Investment Group. According to their latest 13F filings, Neon and Citadel held 223,043 shares and 11,672 shares of Acorn respectively, with Citadel reporting a 5% decrease over the third-quarter.

Disclosure: None