Where There's Smoke, There's Not Always Fire: Be Careful With These 10 Rumor Mill Stocks

The Benzinga newsdesk heard an unusually heavy amount of company-specific rumors Thursday.

On a normal day, trader communities might circulate zero to three or four so-called "unconfirmed" takeover rumors — reports that come from unknown or anonymous sources and often seem unlikely, but nonetheless move markets.

As of noon Thursday, the newsdesk had already gotten wind of seven pieces of unconfirmed chatter.

The saying "where there's smoke, there's fire" comes to mind; however, these reports often fall flat. In the majority of cases, these reports lend to market players something which has recently been the bread and butter for many traders' strategies: volatility.

Perrigo and Michael Kors

Take for example a couple rumors heard on the street Thursday: Perrigo Company plc Ordinary Shares PRGO and Michael Kors Holdings Ltd KORS.

Each of these stocks ran up and spiked to session highs following unconfirmed chatter hitting trader communities and news services. Less than an hour later, both stocks had pared gains and then some.

Perrigo shares, up as much as 1.4 percent at one point Thursday, were seen down 0.26 percent at $76.27 shortly after Friday's opening bell.

Shares of Michael Kors briefly turned positive after the rumor hit, up 0.6 percent for the session, were last seen down 0.14 percent at $41.98. Kors is set to report third-quarter earnings on February 7.

And Others

Perrigo and Kors weren’t the only stocks moving Thursday after rumors hit. 3D Systems Corporation DDD was up 5.71 percent and trading at its highest price since October after renewed chatter about a takeover by General Electric Company GE.

Twitter Inc TWTR was down 1.40 percent midday Thursday. It was announced this week that the company’s Fabric app-building platform would be acquired by Alphabet Inc GOOG GOOGL, which was down slightly as well on Thursday.

Here are six more stocks we’ve noticed are consistently sensitive to price action based on market chatter:

• FireEye Inc FEYE, a cybersecurity company, spiked January 11 after comments about Russian hacking by President-elect Donald Trump.
• Whole Foods Market, Inc. WFM was the subject of M&A rumors throughout 2016, with Publix Super Markets Inc. PUSH and Kroger Co KR both named at points as potential suitors. While volatile, Whole Foods is up 5.73 percent as a whole over the last 12 months.
• Mead Johnson Nutrition CO MJN spiked by almost $3 Wednesday and stayed higher in Thursday’s session, hovering around $74.50. The stock, which has grown 7.8 percent in the last year, has seen huge swings, reaching a high of $93 in July.
• Groupon Inc GRPN has spiked several times on unconfirmed rumors of an acquisition by Alibaba Group Holding Ltd BABA.
• After months of stock surges following unconfirmed buyout rumors, Depomed Inc DEPO — which could reportedly be the subject of a buyout offer from KKR & Co. L.P. KKR within days — has reached as high as $26 in October and was slightly down Thursday, at $18.34.
GoPro Inc GPRO had a bumpy ride with the recall of the Karma drone and production issues with the Hero 5 camera — and it’s been the target of multiple unconfirmed rumors too. GoPro was down slightly and trading near its 12-month low Thursday at $9.19.