Why MGT Capital, Hertz, Office Depot and 2 Other Stocks are Moving Today

The markets opened lower today after the Labor Department reported that the Consumer Price Index increased by 0.4% in April, the largest monthly gain since February 2013. Some of the stocks we are watching today include MGT Capital Investments Inc. (NYSEMKT:MGT), Hertz Global Holdings Inc (NYSE:HTZ), Community Health Systems (NYSE:CYH), Franklin Resources, Inc. (NYSE:BEN), and Office Depot Inc (NASDAQ:ODP). Let’s see what’s making these stocks move today and also analyze hedge fund sentiment towards them.

Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that imitating the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012 (read more details here).

MGT Capital Gets New CEO, Signs Various Deals 

MGT Capital Investments Inc. (NYSEMKT:MGT)’s shares continue to skyrocket after the appointment of cyber security guru John McAfee as the company’s CEO last week. The New York-based tech firm has also announced the acquisition of assets from D-Vasive, an anti-spy software company, for $300,000 in cash and 23.8 million restricted shares of MGT. MGT Capital Investments has also entered into agreements with technology incubators Future Tense Secure Systems and Round House LLC. MGT Capital will now be re-branded as John McAfee Global Technologies. Shares of the company are up by 37% today and by an astounding 1,682% this year.

Two hedge funds in our system were poised for monstrous gains in their holdings, as they reported long positions in MGT Capital Investments Inc. (NYSEMKT:MGT) as of the end of 2015.

Insider Buying at Hertz Global Holdings

Hertz Global Holdings Inc (NYSE:HTZ) shares have surged by more than 12% after a couple of insider buying transactions were disclosed with the SEC yesterday. Hertz Global’s CEO John Tague bought 66,000 shares of the company on May 13 and May 16, at prices between $7.80 and $7.85 per share. Meanwhile, Thomas Kennedy, Hertz Global’s Chief Financial Officer, purchased 40,000 shares on May 13 at an average price of $7.76 per share.

As of the end of last year, 52 hedge funds in our system had stakes in Hertz Global Holdings Inc (NYSE:HTZ), worth approximately $2.4 billion. As of March 31, Carl Icahn’s Icahn Capital LP owns approximately 63.7 million shares of the company.

We will discuss the latest concerning Community Health Systems, Franklin Resources and Office Depot on the next page.

Insider Buying and Tender Results Move Community Health Systems Up

Community Health Systems (NYSE:CYH)’s stock has risen by more than 9% today after the company announced early tender results from the previously announced cash tender offer by its subsidiary CHS/Community Health Systems, Inc. for its 5.125% senior secured notes due 2018. The stock is also likely up today on the back of the recent 13F disclosure by David Einhorn’s Greenlight Capital, which revealed that the fund now owns more than 1.2 million shares of the company. Gabe Hoffman’s Accipiter Capital Management also increased its stake in Community Health Systems (NYSE:CYH) during the first quarter, by 230.83%.

Moody’s Gives Strong Rating to Franklin Resources

Franklin Resources, Inc. (NYSE:BEN)’s stock has moved 1.04% into the green today after Moody’s Investors Service reiterated its A1 senior unsecured rating and P-1 short-term rating for the company’s debt. Moody’s said that the rating is based on the company’s solid long-term performance record, strong distribution resources, and excellent client retention. Moody’s says that Franklin Resources has the ability to manage expenses in cyclical down periods and minimize pressures. Franklin Resources’ highly liquid balance sheet, low leverage and tangible equity also give it a lot of financial flexibility. Richard S. Pzena’s Pzena Investment Management owns more than 10 million shares of Franklin Resources, Inc. (NYSE:BEN) as of the end of March.

Office Depot To Sell Some of its European Operations

Office Depot Inc (NASDAQ:ODP) has plummeted by more than 5% today after the company announced yesterday that it is planning to sell some of its European operations. The announcement comes nearly a week after the office supplies company called off its merger with Staples, Inc. (NASDAQ:SPLS), following the U.S. federal court’s blockade of the deal over antitrust concerns. Office Depot is facing difficulties due to the declining market for office supplies and intensifying competition. Its shares have lost 64% of their value in the last year. Sander Gerber’s Hudson Bay Capital Management owned around 4.01 million shares of Office Depot Inc (NASDAQ:ODP) as of the end of March.

Disclosure: None