The Chip Stock Riding Hedge Fund Tailwinds

By Josh Selway / November 21, 2017 / www.schaeffersresearch.com / Article Link

U.S. stocks have rallied to record levels today. Among those making the biggest moves are semiconductor stock Mellanox Technologies, Ltd. (NASDAQ:MLNX), transportation industry services provider Cubic Corporation (NYSE:CUB), and drugmaker Celsion Corporation (NASDAQ:CLSN). Here's a quick look at what's moving shares of MLNX, CUB, and CLSN.

Starboard Stake Provides Tailwinds for Mellanox Technologies

Mellanox Technologies stock is soaring today thanks to news of a 10.7% stake from activist hedge fund Starboard, which in its SEC filing said, "Tremendous value can be created through operational improvements or other strategic alternatives." Plus, Benchmark lifted its price target to $65 from $60. At last check, MLXN shares were up 10.9% at $56.60, and earlier touched a four-year high of $58.35.

Already up 32% over the past year, options traders may be betting on more upside for the security, since calls are trading at six times the expected pace today. This would be nothing new, as data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows call buying has tripled put buying during the past two weeks.

Cubic Stock Trades at Record High After Earnings, Contract Win

Shares of Cubic Corporation are also surging today, after the company landed a contract to produce new fare payment systems for the Massachusetts Bay Transportation Authority. Not to mention, the company topped estimates with its fiscal fourth-quarter earnings report, resulting in price-target hikes from Canaccord Genuity ($64) and Raymond James ($62). CUB stock as so far added 16% to trade at $62.05, and earlier peaked at a record high of $64.20.

Even more upside could be in store, too, if a short-squeeze situation unfolds. Short sellers currently hold almost 11 days' worth of buying power, based on average daily volumes.

Oppenheimer Note Boosts Celsion Stock

Celsion stock has exploded 32% to trade at $2.83, after Oppenheimer said its optimistic about the company's trial for its liver cancer treatment. Analysts there began coverage with an "outperform" rating and $9 price target. This represents territory not explored since last December. CLSN stock shot higher last month, but on multiple occasions was rejected at the $6 level before reversing lower. Meanwhile, a number of short sellers got out of dodge, since these bearish bets fell by almost 58% in the last reporting period.

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