Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of XenoPort (NASDAQ:XNPT), a biopharmaceutical company developing therapies to treat neurological disorders and various other types of disorders, spiked higher by as much as 16% following the release of a letter from activist investing firm The Clinton Group, which was sent to XenoPort shareholders prior to the June 11 annual meeting.

So what: Clinton Group has been very specific for months that XenoPort's management team has mismanaged Horizant, the company's FDA-approved moderate-to-severe restless leg syndrome drug. In the words of Clinton Group: "In our view, XenoPort's spending on Horizant has cost stockholders significantly in the form of a lower stock price and dilution. Moreover, the analysts who cover the Company now regard Horizant as being less valuable than before XenoPort started spending its previous capital on the drug." Clinton Group also concluded that management's incentives aren't aligned with shareholders. The activist firm is looking to place three of its nominated independent professionals on XenoPort's board in order to alter XenoPort's growth strategy for the perceived-to-be better.

Now what: In other words, the real reason for the surge in XenoPort's share price is the level of activism being demonstrated by Clinton Group. Activist investors have gained a lot of notoriety in recent years for heralding spin-offs and buyouts, and otherwise unlocking shareholder value that may have remained locked up without their help. Investors are obviously taking their cues from Clinton Group today that change could be coming to XenoPort's board of directors that may result in the unlocking of value in XenoPort shares. Of course, investors would be wise to wait until after the June 11 board of directors election before making a bet one way or another, but this is definitely a polarizing stock worth keeping your eyes on.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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