Why These 4 Stocks are Among the Most Actively Traded Today

The U.S stock market is trading slightly in green territory despite declining oil prices caused by fears about the state of China’s economy. Amid this backdrop, shares of Baxalta Inc (NYSE:BXLT), Shire PLC (ADR) (NASDAQ:SHPG), Arch Coal Inc (NYSE:ACI) and Macy’s, Inc. (NYSE:M) are moving briskly in today’s trading session as investors buy and sell each stock based on various pieces of news. Let’s find out why these stocks have investors talking as well as how hedge funds view each of them.

Let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research, we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith (and money) in large-cap stocks (read the details here). Follow the smart money into only their best investment ideas all while avoiding their high fees.

First up is Baxalta Inc (NYSE:BXLT), shares of which have now slid by 2% after initially gapping open higher this morning on the back of London-listed drugmaker Shire PLC (ADR) (NASDAQ:SHPG) agreeing to pay $32 billion to acquire Baxalta. The transaction will be settled in cash and stock, with Baxalta shareholders receiving $18 in cash and 0.1482 Shire American depositary shares per Baxalta share, for a total value of $45.57 per share. The deal’s premium amounts to about 40% when compared to Baxalta’s share price in early August, when Shire first began courting it, and 12.5% of its current price, the latter of which appears to suggest uncertainty among investors as to whether the deal will actually be consummated. In August 2015, the drug maker made a $30 billion all-stock offer, which was rejected by Baxalta because the company felt it was undervalued.

During the third quarter, Baxalta Inc (NYSE:BXLT) registered an increase in popularity among the funds we track, with 39 investors holding long positions at the end of September, versus only four funds a quarter earlier, with them amassing around 3.4% of its outstanding stock as of September 30.

On the other hand, Shire PLC (ADR) (NASDAQ:SHPG), which is down by 7.82% today, witnessed a slight decrease in popularity in the third quarter, with 43 investors holding long positions at the end of the period, compared to 44 funds at the end of the second quarter. Among them, John Paulson‘s Paulson & Co was the largest shareholder, reporting ownership of 6.81 million shares in its latest 13F filing.

On the following page we’ll dig into the latest news concerning Arch Coal and Macy’s.

In other news, Arch Coal Inc (NYSE:ACI)’s shares have plummeted by slightly over 50% today (and have now been suspended) after the company filed for Chapter 11 bankruptcy. The company has listed assets valued at $5.8 billion and $6.4 billion in liabilities. Through a reorganization, the company plans to eliminate $4.5 billion in debt and continue with its mining activities.

Arch Coal Inc (NYSE:ACI) lost popularity among the investors in our database in the third quarter, as out of the 730 funds that we track, nine funds held shares of the company on September 30, amassing 11.4% of the float. Jim Simons‘ Renaissance Technologies is the largest shareholder of Arch Coal Inc, owning a position worth $6.6 million at the end of September.

Moving on, Macy’s, Inc. (NYSE:M)‘s stock is up by 4% on the news that Jeffrey Smith‘s activist hedge fund Starboard Value presented a letter to the company on Sunday, pushing the retailer to separate its properties into two or more entities with the aim to create $10 billion in value. The fund suggested two different joint ventures, one for Macy’s, Inc.’s landmark properties (such as the Herald Square) and the other covering all of its other mall locations.

Among the funds that we follow, 67 reported long positions in Macy’s, Inc. (NYSE:M) as of the end of September, up by six funds from a quarter earlier. Starboard Value reported holding 3.26 million Macy’s shares, worth $167.4 million, in its latest 13F filing.

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