Why Are These Five Stocks Advancing Today?

The major US indexes are mixed ahead of Christmas, but shares of Sunedison Inc (NYSE:SUNE), Advanced Micro Devices, Inc. (NASDAQ:AMD), Patriot National Inc (NYSE:PN), Rovi Corporation (NASDAQ:ROVI) and MBIA Inc. (NYSE:MBI) are advancing today. In this article, let’s take a look at why these stocks are gaining ground and assess the hedge fund sentiment towards them.

We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see more details here). That’s why we believe it is important to pay attention to the hedge fund sentiment; we also don’t like paying huge fees.

The first on the list is Sunedison Inc (NYSE:SUNE), whose shares are up by 8.5% today after the company said it was conducting negotiations regarding a credit facility worth $650 million. The stock rebounded and recovered some of the losses registered after David Tepper’s Appaloosa Management has requested the right to inspect the books of TerraForm Power Inc (NASDAQ:TERP), a yieldco of Sunedison. Among the funds we track, Sunedison Inc (NYSE:SUNE) lost some popularity during the third quarter, with a total of 73 funds reporting long positions in the company, versus 93 funds a quarter earlier. However, these funds amassed 46.80% of the company’s outstanding stock heading into the fourth quarter. David Einhorn‘s Greenlight Capital reported owning 18.61 million shares of Sunedison in its latest 13F filing, having decreased its stake by 26% over the quarter.

Despite the fact that Advanced Micro Devices, Inc. (NASDAQ:AMD) has confirmed it is going to delay the launch of its Radeon graphics card with dual Fiji GPUs (code-named Gemini) for the next year, shares continue to rise, extending the upward trend that started yesterday. Among the funds we follow, 11 reported long positions in Advanced Micro Devices as of the end of September, down by four funds from a quarter earlier. Cliff Asness’s AQR Capital Management is the largest shareholder of the company among the investors we follow, owning 1.7 million shares valued at $2.92 million; the fund decreased its stake by 44% during the third quarter.

Next on our list of morning gainers is Patriot National Inc (NYSE:PN), whose shares are up by 25% after closing an agreement with various institutional investors. The agreement allows the company to buy back up to 1,666,666 common shares for $20 million. Also, it will exchange existing warrants for new ones to purchase up to an aggregate of 3,250,000 shares of common stock. Hedge fund sentiment Patriot National Inc (NYSE:PN) remained stayed steady during the the third quarter, as the number of hedge funds long the stock (among those we track) remained unchanged at six. However, these funds amassed only 6.0% of the company’s outstanding stock heading into the fourth quarter.

Rovi Corporation (NASDAQ:ROVI) shares are up by 4% as investors become more optimistic following the license renewal with AT&T Inc. (NYSE:T) for seven years. It is not only a renewal of the preexisting license, but it will also extend the previous agreements between them. Our data show that the smart money is fond of the company, with the number of funds long Rovi Corporation (NASDAQ:ROVI) having increased by two to 22 during the third quarter. Together they hold some 10.5% of the company’s common stock, while George Soros’ Soros Fund Management is the largest shareholder, owning 4.07 million shares valued at $42.66 million as of the end of September.

Finally, in our list of gaining stocks is MBIA Inc. (NYSE:MBI), whose shares surged by 9% following reports that the Puerto Rico’s electric utility has reached a restructuring agreement for its $8.2 billion of debt. One of the parties of the deal is MBIA. Among the funds we track, 30 funds reported holding $263.1 million worth of MBIA Inc. (NYSE:MBI) shares as of the end of the third quarter. Among the bulls is Jeffrey Tannenbaum’s Fir Tree, holding a stake of 5.59 million shares, and having upped his stake by 492% during the trimester.

Disclosure: none