Why Are Investors Piling Into These 5 Surging Stocks?

It’s a day of diverging indexes as the S&P 500 is up by 0.37% while the NASDAQ is down by 0.20%. The diverging results are due to various earnings reports that affect the indexes differently. Among the stocks well in the green are Spirit Airlines Incorporated (NASDAQ:SAVE), Foresight Energy LP (NYSE:FELP), Tile Shop Hldgs, Inc. (NASDAQ:TTS), Heron Therapeutics Inc (NASDAQ:HRTX), and Superior Industries International Inc. (NYSE:SUP). Let’s find out why investors are loading up on shares of these stock and see what the group of hedge funds in our database think of each of them.

At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).

Updated Guidance Powers Spirit Airlines

Spirit Airlines Incorporated (NASDAQ:SAVE) is 5% higher after the company issued an update on its first quarter guidance. The airline now expects operating margin to be around 21.5%, versus the previous range of 19% to 20.5%. The improved margin is due to better-than-expected revenue, primarily due to higher-than-expected ticket revenue per passenger segment. Adjusted cost per available seat mile excluding fuel is expected to fall by 2% when including a special one-time ratification incentive payment, versus previous guidance of 2.5%-to-3.5%. When excluding that payment, CASM ex-fuel would have fallen by 4.5%, ‘of which approximately one and half percentage points is related to timing of costs that will push to later in the year’. Revenue per available seat mile is expected to decline by 14% year-over-year. 35 funds that we track held shares of Spirit Airlines Incorporated (NASDAQ:SAVE) at the end of December. That was down by four from the end of the prior quarter.

Some Debt Lenders Amenable to Restructuring for Foresight Energy 

Foresight Energy LP (NYSE:FELP) shares have surged by 28% today after the company disclosed that consenting lenders have agreed to support a proposed global restructuring of the partnership’s indebtedness, including a proposed amendment and restatement of a credit agreement. Interested investors can find the full details of the agreement in the company’s Form 8-K SEC filing. The senior lenders will cut the credit facility by $75 million and trim the facility by another $25 million at the end of 2016. There is also an anti-hoarding provision that requires Foresight to pay the lenders if the company’s cash holdings rise above $35 million. No funds that we track had shares of Foresight Energy LP (NYSE:FELP) at the end of December.

On the next page we examine why Tile Shop Hldgs Inc, Heron Therapeutics Inc, and Superior Industries International Inc. are all in the good graces of investors this morning.