In Friday Intraday trading, the Dow and S&P 500 have inched up by some 0.5% and 0.2%, respectively, on the back of yesterday’s Supreme Court ruling on the Affordable Care Act. Nevertheless, aside from the ruling, a number of other news have moved the market on Friday and in this article we will take a look at four stocks that are in the spotlights today. Three of them are newly-traded companies that have conducted their IPOs on Friday: Xactly Corp (NYSE:XTLY), AppFolio Inc (NASDAQ:APPF) and AlarmCom Hldg Inc (NASDAQ:ALRM), all of which gaining ground in the first hours of trading. Then there is Cleveland BioLabs, Inc. (NASDAQ:CBLI), whose stock doubled in the last couple of days, on the back of the news about the sale of a controlling stake. Let’s take a look at each of these companies in more detail and see the hedge fund sentiment regarding some of them.
The reason we look at the hedge fund sentiment for these stocks is because most investors ignore hedge funds’ moves because, as a group, their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the benchmark in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research has shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period. We have been tracking the performance of these stocks in real-time since the end of August 2012. After all, things change and we need to verify that back-test results aren’t just a statistical fluke. We weren’t proven wrong. These 15 stocks managed to return more than 145% over the last 34 months and outperformed the S&P 500 Index by 85 percentage points (see the details here).
So let’s start with the new companies, which are Xactly Corp (NYSE:XTLY), AppFolio Inc (NASDAQ:APPF), and AlarmCom Hldg Inc (NASDAQ:ALRM). Xactly is an enterprise software company that provides cloud-based incentive compensation solutions for sales performance management and other employees. The company went public with 7.04 million shares at $8.00 per unit and in the first hours of trading its stock jumped by more than 20% on a volume of 3.5 million shares. The offering is expected to close on July 1. So far, none of the funds we track disclosed ownership of Xactly Corp (NYSE:XTLY) shares and according to its S-1 form, among the principal and selling stockholders are entities associated with Rembrandt Venture Partners and Bay Partners, among others, which own 11.4% and 8.8% of Xactly after the IPO.
AppFolio Inc (NASDAQ:APPF) is another tech IPO that caught out attention as the stock climbed more than 16% on Friday. Appfolio provides cloud-based software solutions with a focus on the property management and legal industries for small-and medium sized enterprises. The IPO involved the sale of 6.20 million class A shares at a price of $12.00 per unit. AppFolio Inc (NASDAQ:APPF)’s S-1 form also indicates private investment company IGSB and venture capital firm BV Capital among its principal shareholders with 33.1% and 14.2% of the voting power respectively.
AlarmCom Hldg Inc (NASDAQ:ALRM) went public at a price of $14.00 per share and jumped by more than 20% in Intraday trading. The security company sold a total of 7.0 million shares in its IPO and underwriters could sell an additional 525,000 shares. Alarm.com provides services that allow homeowners and businesses to control their security systems, lights and other devices remotely. According to its S-1 form, the company has around 2.30 million subscribers and generated revenue of $46.01 million in the first three months and a net income of $3.04 million. Similar to the previous newly-public companies, so far none of the large investors disclosed positions in AlarmCom Hldg Inc (NASDAQ:ALRM).
The stock of the $22 million biopharmaceutical company Cleveland BioLabs, Inc. (NASDAQ:CBLI) appreciated only by 4% on Monday, but it is up by over 100% in the last five days. The stock spiked as the company agreed to sell a 61% stake to a Russian venture capitalist, David Davidovich, at $3.87 per share. The deal will allow Cleveland BioLabs, which has been struggling financially, to continue its research and development of a drug that might be able to treat radiation sickness. Among the funds we track, it looks like Jim Simons of Renaissance Technologies could have anticipated a positive outcome for the cash-strapped Cleveland BioLabs, as Renaissance disclosed a new position with 48,300 shares in its latest 13F, while Brian Taylor‘s Pine River Capital Management held 15,000 shares, also a new position. On the other hand, Hal Mintz‘s Sabby Capital closed its stake during the first three months, previously owning 377,200 shares.
Disclosure: none
