Why Callon, Seadrill, OncoSec, EMC, and MGM’s REIT Are Enjoying Strong Gains Today

In spite of some disappointing earnings calls before the market opened, stocks are trading up on Wednesday afternoon, helped by recuperating oil prices (driven by lower-than-expected stockpile figures) and upbeat housing data. Among the stocks accompanying the surge in the markets are Callon Petroleum Company (NYSE:CPE), Seadrill Ltd (NYSE:SDRL), OncoSec Medical Inc (NASDAQ:ONCS), EMC Corporation (NYSE:EMC), and MGM Growth Properties LLC (NYSE:MGP). Let’s take a look into the events pushing these stocks higher today, and see what the hedge funds in our database think about the companies in question.

At Insider Monkey, we track more than 785 hedge funds, whose 13F filings we analyze as part of our small-cap strategy. Our research has shown that imitating a portfolio that includes the 15 most popular small-cap stocks among hedge funds can outperform the market by as much as 95 basis points per month on average (see more details here).

Callon Rides Wave of News

Let’s start with Callon Petroleum Company (NYSE:CPE), which is up by 7.4% in the early afternoon hours. The rally in the small-cap independent oil and natural gas company, which started on Tuesday evening and has extended into today’s trading session, was triggered by a few pieces of news. On the one hand, the company announced it had agreed to acquire assets operated by Big Star Oil and Gas, LLC in West Texas’ Permian Basin for $220 million in cash and approximately 9.3 million shares of Callon’s common stock. In addition, the company said it had jointly acquired 4,745 net acres north of the Garrison Draw field, also in Texas, and that it had sold 27.5% of this asset to TRP Energy for roughly $33 million. Finally, management announced that it has priced an underwritten public offering of 22 million shares of the company for total estimated gross proceeds of $187 million.

Among the funds that we track, 19 were long Callon Petroleum Company (NYSE:CPE) at the end of the fourth quarter. On February 23, Steve Cohen’s Point72 Asset Management declared a marked increase to its stake in the company, to more than 4.07 million shares from 760,300 shares held at the end of December.

Rally Continues for Seadrill on Recuperating Oil Prices

Next up is Seadrill Ltd (NYSE:SDRL), which is up by almost 2.9% on Wednesday afternoon, adding to the 12.63% gains posted on Tuesday. The spike seems to be driven by the surge in oil prices, which has helped many oil-related companies the past couple days. Even though the Doha oil producers’ meeting failed to reach a settlement, oil remains above $40 a barrel, helped by lower-than-expected U.S stockpile figures.

As of the end of 2015, Seadrill Ltd (NYSE:SDRL) counted 21 hedge fund supporters in our database, including Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, which declared holding 4.98 million shares of the company as of December 31 after nearly doubling its holding during the fourth quarter.

Three more stocks posting big gains are studied on the following page.

OncoSec an AACR Winner

Shares of OncoSec Medical Inc (NASDAQ:ONCS) are trading up by more than 14.1% on Wednesday afternoon, propelled by the company’s presentation at the AACR Annual Meeting, which showed positive follow-up data from patients who were treated with the company’s investigational therapy ImmunoPulse™ IL-12, and then went on to receive anti-PD-1/PD-L1 therapy. “We are encouraged by the data from this analysis, which show that intratumoral IL-12 DNA with electroporation can prime the immune system and help improve patient response to anti-PD-1,” said Dr. Algazi, skin cancer specialist in the Melanoma Center at the UCSF Helen Diller Family Comprehensive Cancer Center.

As with most nano-caps, OncoSec Medical Inc (NASDAQ:ONCS) does not count much hedge fund support. Only two funds in our database were long the stock at the end of 2015. The largest stake was held by Wayne Holman’s Ridgeback Capital Management and consisted of 1.29 million shares of the company.

EMC Takeover Still on Track Despite Disappointing Results

Another gainer on Wednesday is EMC Corporation (NYSE:EMC), which has gained more than 3% since the bell rang this morning, even though the company’s first quarter EPS of $0.31 and revenue of $5.5 billion missed the Street’s expectations by $0.02 and $140 million, respectively. So, what is driving the stock up? Well, it’s all about the Dell deal. The company agreed last year to be acquired and taken private by Dell Inc. for roughly $67 billion and EMC CEO Joe Tucci assured today that the merger is still on track, and should be completed by October.

77 funds among those we track were long EMC Corporation (NYSE:EMC) at the end of the fourth quarter, with their combined positions accounting for almost 14% of its outstanding stock. A noteworthy position was that of Jonathan Lourie and Stuart Fiertz’s Cheyne Capital, which held 1.32 million shares of the company worth roughly $35 million as of December 31.

MGM’s REIT Goes Public In Largest IPO In 2016

Finally, there’s MGM Growth Properties LLC (NYSE:MGP), which is up by about 6.1% this afternoon, on its first day of trading. The REIT raised $1.05 billion in its initial public offering, selling 50 million shares for $21.00 each, with the IPO being priced at the high end of its projected range. It was the first IPO by a U.S-listed company to raise more than $1 billion this year, Dealogic reported.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned in this article.