The bull market may have seen an interruption this past week, but stocks are still very close to all-time highs and this bull market is now six years old. It turns out that some stocks had significant moves last week. Some were on exponential volume spikes as well. 24/7 Wall St. has tracked five of the unusual stock movers over the past week to see if investors should keep their eyes open for opportunities in the coming week.
These moves are generally characterized as well over 10%, and almost always on major volume. We have already featured analyst calls under $10 and analyst Buy ratings in the oil and gas sector. These unusual movers were in controversial stocks, merger stocks, activist stocks and more.
Lumber Liquidators Holdings Inc. (NYSE: LL) has been on a roller-coaster ride this past week, with its share price ranging as low as $27.79 and all the way up to $37.78. All the trouble started when the CBS news show “60 Minutes” alleged that the company’s products contained a high level of formaldehyde, a known carcinogen. Following this news, shares dropped a total of 46% to the low.
Originally in the company’s statement to the U.S. Securities and Exchange Commission (SEC), it assigned blame for the crumbling share price to an attack by short sellers. Think about it like this: maybe short sellers are attacking, but at the same time, the company’s performance has done nothing really to counter the shorts, and the “60 Minutes” story obviously did not help.
Activist investor Robert Chapman, the CEO of Chapman Capital, has stepped in, stopping the bloodletting. Chapman has taken a long position in the stock, despite its large fall, approximately 45% year to date. As reported on CNBC, his position makes up about 15% of his fund. This boosted Lumber Liquidators shares as much as 16% on Wednesday, but they were down 8% at $33.17 in Friday’s late trading session. The 52-week trading range is $27.79 to $108.40. Who knows where this stock is going next?
This week, Zogenix Inc. (NASDAQ: ZGNX) announced an agreement for the sale of its Zohydro ER (hydrocodone bitartrate) business to Pernix for $100 million. This transaction will be composed of $30 million in cash, $20 million in Pernix common stock and a $50 million short-term promissory note. This transaction will enable Zogenix to shift strategic focus to its late-stage CNS clinical pipeline, which includes two anticipated product candidates.
Looking as far back as February 2014, shares were closing in on the $5 mark but fell short, way short. At that time, shares fell as much as 26%, similar to the fall we are seeing now, after a rival pharmaceutical company said it will seek regulatory approval of a tamper-proof version of Zogenix’s Zohydro. Shares were down as much as 30% at $1.17 on Wednesday. The stock has a consensus analyst price target of $2.75 and a 52-week trading range of $1.07 to $3.98.
When it reported its fourth-quarter results Thursday after the markets closed, foreign exchange trader FXCM Inc. (NYSE: FXCM) posted $0.27 in earnings per share (EPS) and $134.7 million in revenue, coming over the top of Wall Street expectations.
This was a significant quarter and very much needed for FXCM to stay afloat, in the wake of the Swiss central bank removing its cap on the franc against the euro. In January, the value of the franc against the euro skyrocketed, making loans that were financed across Europe using the franc a loss for the lenders and crippling some foreign exchange (forex) traders carrying francs. As a result of the positive earnings, shares were up as high as 29.8% at $2.79 in Friday’s trading session, in a 52-week trading range of $1.28 to $17.44.
Friday morning, Herbalife Ltd. (NYSE: HLF) was under attack yet again on by activist investor Bill Ackman in an appearance on CNBC’s “Squawk Box.” However, despite stating his case against the giant nutrition company, shares of Herbalife shares rallied before the opening bell and continued throughout the day. Ackman came on the show to defend himself after reports that there has been market manipulation around Herbalife shares. A former federal prosecutor, Jacob Frenkel, weighed in on the situation as well.
The real reason Herbalife stock was up in Friday’s trading session was not to spite Ackman. The rally likely was being pinned on the news that the government is looking into whether the market or stock was manipulated. Depending on that outcome, this could prove costly to Ackman, in more ways than one.
Shares of Herbalife were up as high as 15.3% at $38.35 Friday, but the stock was up about 8% at $35.90 shortly before the close. The consensus price target is $57.80, and the 52-week trading range is $27.60 to $69.69.
The merger situation with Salix Pharmaceuticals Ltd. (NASDAQ: SLXP) has become a much more complicated. Endo International PLC (NASDAQ: ENDP) has made a bid for Salix in a private letter sent to the board of directors. The offer was reportedly for roughly $175 per share. The deal will consist of 25% in cash, and the remainder will be in stock.
Investors may wish for a buyout at $170 or higher, but the $170 calls from April were trading at $2.85 per contract late on Friday, and the implied volatility is only 17%. The long and short of the matter is that option buyers did not seem that excited. Then came news that Valeant would be interested in bidding higher. Shares of Salix shot up 7% on Wednesday to close at $168.61, in a 52-week trading range of $86.00 to $172.98. Volume was over 17 million shares on Wednesday as well, almost six times normal. Shares were at $168.45 late on Friday.