Why Are These Stocks Surging Today?

With all three indexes again down 1% or more on Thursday and fears of a potential 2008 replay rising, shares of MakeMyTrip Limited (NASDAQ:MMYT), Arotech Corporation (NASDAQ:ARTX), TherapeuticsMD Inc (NYSEMKT:TXMD), Barrick Gold Corporation (USA) (NYSE:ABX), and Chico’s FAS, Inc. (NYSE:CHS) are surging. Let’s take a closer look at why investors are buying.

Given that Insider Monkey has done a lot of research into what the smart money likes and doesn’t like, let’s also analyze relevant hedge fund sentiment toward these stocks. 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 the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.

Leading indian travel company MakeMyTrip Limited (NASDAQ:MMYT) is 27.7% higher today after the company announced that Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) will invest $180 million in the company through convertible bonds. In addition, MakeMyTrip has given Ctrip permission to acquire up to 26.6% of its outstanding shares through convertibles and open market purchases. CEO Deep Kalra said:

“We are delighted to have Ctrip invest in us. Ctrip is the dominant market leader in the online travel market in China. We believe there are many similarities in the Indian and Chinese online travel markets and we expect this strategic relationship between two market leaders to be mutually beneficial.”

A total of 12 elite funds from our database owned 15.40% of MakeMyTrip Limited (NASDAQ:MMYT)’s float at the end of the third quarter.

Shares of nano-cap Arotech Corporation (NASDAQ:ARTX) surged by 17% on technical buying today, as bullish traders bet that the stock’s recent rally will continue. Arotech Corporation (NASDAQ:ARTX) recently closed above a key technical average and some investors hope that management can turn the company around. Due to its small market cap, not many elite funds own the stock. Our data show that only two of the around 730 elite funds that we track were long Arotech at the end of September.

On the next page, we examine TherapeuticsMD Inc, Barrick Gold Corporation (USA), and Chico’s FAS Inc.

In a pleasant surprise, TherapeuticsMD Inc (NYSEMKT:TXMD) shares are almost 10% in the green today as the stock bounces back from the losses caused by the Tuesday announcement that the biotech company plans to raise $125 million from issuing common stock. In a press release issued today, TherapeuticsMD Inc (NYSEMKT:TXMD) disclosed that it plans to offer shares at $8.25 apiece and to use the proceeds to finance commercialization activities for TX-004HR, the company’s applicator-free vaginal estradiol softgel drug candidate, along with other purposes.

With volatility back and fear skyrocketing, it’s not surprising that Barrick Gold Corporation (USA) (NYSE:ABX) shares are 7.3% higher today as gold commodity prices have also rallied by over 1.2% in afternoon trading. If George Soros is right and 2016 is a potential replay of 2008 and gold prices rallied a lot in 2008, the rally in gold might not be as fragile as the bears think. Hedge fund sentiment in Barrick Gold Corporation (USA) (NYSE:ABX) has remained stable, with the number of elite funds long the stock falling by just two quarter-over-quarter to 40 at the end of September.

Wrapping up our list is Chico’s FAS, Inc. (NYSE:CHS), whose shares are 5% in the green in afternoon trading. Although there is no particular fundamental news for Chico’s FAS, Inc. (NYSE:CHS)’s gains today, is somewhat of a value play with a dividend yield of 2.89% and a forward P/E of 13.5. A total of 23 elite funds among those we track also owned the stock at the end of the third quarter, up from 19 at the end of the second quarter.

Disclosure: None