Funds are buying these 6 rallying stocks under 5 dollars

By
A A A

By James Dennin for Kapitall.

The Russell 2000-the index of smaller companies-split with the Dow Jones on Tuesday, losing more than 1% while the Dow edged up on favorable news from the financial sector. 

Remarks by Federal Reserve Chair Janet Yellen, who announced her concern about valuations amongst smaller internet and biotechnology firms, threw a pessimistic pall on those stocks, which are among the most popular stocks among small-cap investors. 

Small-cap stocks are the most susceptible to swings in market sentiment right now, since it's expected that stretched valuations will lead to quicker interest rate hikes. 

With stocks in this area being punished, we decided to see who had outperformed during the period, with the Russell 2000 reaching a two-year-low this past week. 

To do that we screened for stocks under $5 that were also rallying above their  20-day, 50-day, and 200-day simple moving averages (SMAs) . This means the stock has strong upward momentum. 

Next, we screened for stocks that had interest from institutional investors like hedge fund and pension managers. This information is often closely watched since institutional investors often have access to the best information. 

This screen left us with six stocks. Will you be adding any small caps to your portfolio? Use the list below to begin your analysis, and let us know what you think in the comments. 

Click on the interactive chart to view data over time. 

1. American Apparel, Inc. ( APP , Earnings , Analysts , Financials ): Engages in the manufacture, distribution, and retail of fashion basic apparel for women, men, children, and babies. Market cap at $147.43M, most recent closing price at $0.85.  

Net institutional purchases in the current quarter at 10.8M shares, which represents about 11.42% of the company's float of 94.58M shares. 

SMA 20: 40.76%

SMA 50: 63.77%

SMA 200: 25.98%

Major holder: 1832 Asset Management L.P. at a 5.39% stake. 

2. pSivida Corp. ( PSDV , Earnings , Analysts , Financials ): Develops drug delivery products that are administered by implantation, injection, or insertion. Market cap at $133.09M, most recent closing price at $4.55.  

Net institutional purchases in the current quarter at 1.2M shares, which represents about 5.43% of the company's float of 22.11M shares. 

SMA 20: 3.84%

SMA 50: 13%

SMA 200: 16.55%

Major holder: RA Capital Management, LLC at a 8.75% stake. 

3. Progenics Pharmaceuticals Inc. ( PGNX , Earnings , Analysts , Financials ): Engages in the development and commercialization of therapeutic products to treat the unmet medical needs of patients with debilitating conditions and life-threatening diseases in the United States and internationally. Market cap at $297.76M, most recent closing price at $4.28.  

Net institutional purchases in the current quarter at 5.0M shares, which represents about 8.64% of the company's float of 57.84M shares. 

SMA 20: 2.59%

SMA 50: 12.48%

SMA 200: 0.31%

Major holder: Federated Investors, Inc. at a 19.49% stake. 

4. Sonus Networks, Inc. ( SONS , Earnings , Analysts , Financials ): Provides voice and data infrastructure solutions for wireline and wireless telephone service providers. Market cap at $946.21M, most recent closing price at $3.85.  

Net institutional purchases in the current quarter at 23.0M shares, which represents about 10.57% of the company's float of 217.60M shares. 

SMA 20: 8.51%

SMA 50: 13.53%

SMA 200: 22.65%

Major holder: Empire Capital Management, LLC at a 10.68% stake. 

5. RadiSys Corporation ( RSYS , Earnings , Analysts , Financials ): Develops, produces, and markets application-ready software and hardware platforms for Internet protocol ( IP )-based wireless, wireline, and video networks markets.  Market cap at $116.08M, most recent closing price at $3.22.  

Net institutional purchases in the current quarter at 5.1M shares, which represents about 15.11% of the company's float of 33.76M shares. 

SMA 20: 2.5%

SMA 50: 4.74%

SMA 200: 9.88%

Major holder: Nierenberg Investment Management Company at an 11.89% stake.

6. Meru Networks, Inc. ( MERU , Earnings , Analysts , Financials ): Engages in the development and marketing of a virtualized wireless LAN solution. Market cap at $83.82M, most recent closing price at $3.61.  

Net institutional purchases in the current quarter at 1.1M shares, which represents about 9.15% of the company's float of 12.02M shares. 

SMA 20: 6.58%

SMA 50: 8.45%

SMA 200: 2.03%

Major holders: Raging Capital Management, LLC at a 7.82% stake. 

(List compiled by James Dennin. Monthly returns sourced from Zacks Investment Research. Institutional data sourced from Fidelity, all other data sourced from Finviz.)

Kapitall Wire is a division of New Kapitall Holdings, LLC. Kapitall Generation, LLC is a wholly owned subsidiary of New Kapitall Holdings, LLC. Kapitall Wire offers free investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by New Kapitall Holdings, LLC, and its affiliate companies.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: IP

Kapitall

Kapitall

More from Kapitall:

Related Videos

Stocks

Referenced

75%

Most Active by Volume

48,099,947
  • $16.09 ▲ 0.50%
40,277,806
  • $102.50 ▲ 0.24%
40,236,499
  • $19.57 ▲ 2.35%
31,092,510
  • $49.75 ▲ 0.65%
30,795,218
  • $34.92 ▲ 0.78%
29,910,855
  • $3.63 ▲ 0.83%
24,019,154
  • $13.06 ▼ 0.38%
23,753,906
  • $74.82 ▲ 1.31%
As of 8/29/2014, 04:04 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com