European stock markets closed slightly lower on Wednesday and major US indices have also inched down so far in the intraday trading amid inflation data from China, which indicated a 1.5% growth in prices in November. Nevertheless, shares of AeroVironment, Inc. (NASDAQ:AVAV), Cara Therapeutics Inc (NASDAQ:CARA), Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY), and Huntsman Corporation (NYSE:HUN) are going the opposite way and are trading higher. So let’s find out why investors are bullish on these four stocks today and how the smart money investors have been trading these stocks of late.
At Insider Monkey, we track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 53 percentage points (102% return vs. S&P 500’s 48% gain) over the last 37 months (see the details here).
AeroVironment, Inc. (NASDAQ:AVAV)’s shares are up by 15% after the company reported better-than-expected results for its Fiscal 2016 second quarter. Earnings per share increased to $0.19 per share compared to a loss of $0.13 per share in the same period of the last, beating estimates by $0.28. Furthermore, revenue rose by 22.9% year-over-year to $64.73 million, beating estimates by $6.99 million. Although there was a decrease in sales in the Efficient Energy Systems segment of $1.5 million, the Unmanned Aircraft Systems registered an increase of $13.5 million, which explains the rise in revenues. For fiscal 2016, the firm expects revenue in the range of $260 million to $280 million.
A total of 9 funds from our database held $21.17 million worth of AeroVironment’s stock at the end of September, amassing around 4.50% of the company. David Park‘s Headlands Capital holds the largest stake in AeroVironment, which contains 510,000 shares.
Huntsman Corporation (NYSE:HUN)’s stock has advanced by 7.2%, recovering from a four days of declines, during which the stock lost 16%. On December 3, analysts at UBS AG reiterated their ‘Buy’ rating on the stock, but lowered their price target to $20 from $25.
The number of hedge funds long the stock increased to 45 from 38 during the third quarter. Together, they hold some 19.5% of the company’s common stock as of September 30. Matt Sirovich and Jeremy Mindich‘s Scopia Capital is the largest shareholder of Huntsman Corporatio among the funds we track, having raised its position by 14% during the third quarter to 13.87 million shares, valued at $134.4 million.
Next on our list is Cara Therapeutics Inc (NASDAQ:CARA), whose stock has gained over 7% so far today. The shares of the biotech company rallied on the back of its financial results for the third quarter of fiscal 2015, which included a net loss of $4.8 million, or $0.19 per share, compared to a net loss of $6.5 million, or $0.29 per basic and diluted share for the same period of 2014. The company´s revenue increased by 117.9% year-over-year to $2.44 million. Both revenue and EPS managed to beat the estimates by $0.67 million and $0.08, respectively. In addition, the company has announced that the Phase 2a trial of Oral CR845 in osteoarthritis patients is fully enrolled.
During the third quarter, Cara Therapeutics Inc (NASDAQ:CARA) gained some support from the smart money investors that we track, as the number of the funds invested in the stock increased to 14 from 12; they amassed around 11.5% of the company at the end of September. Jerome Pfund and Michael Sjostrom‘s Sectoral Asset Management is the largest shareholder of Cara Therapeutics with 1.02 million shares worth $14.62 million disclosed in its latest 13F filing.
Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY)’s stock opened higher but has since lost most of the gained ground. The company has also reported its third-quarter results, posting EPS of $0.12, beating analyst estimates by $0.09 per share, while revenue of $192.8 million, went up by 17.9% on the year and was above the $185.40 million figure projected by analysts. Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) also delivered an 8.8% comparable store sales growth in the third quarter. Despite a 6% reduction in its holding, Columbus Circle Investors remained the largest shareholder of Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) among the funds we track. In its latest 13F filing, the fund reported ownership of 603,671 shares worth $22.84 million. Overall, the number of funds with long positions stood at 23 at the end of September, down from 26 three months earlier. These funds held in aggregate 10.6% of the company’s outstanding stock.
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