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Why NIO, Resolute Energy, and Zayo Group Holdings Jumped Today

By Dan Caplinger - Nov 19, 2018 at 3:44PM

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Find out which of these stocks rose on an acquisition offer ... and which moved on rumors.

The stock market fell sharply on Monday, with major benchmark indexes declining by between 2% and 3%. Investors reacted to a raft of concerns, including word of high-profile slowdowns in the technology industry, ongoing worries about global trade disputes, and President Trump's suggestion that there could be a partial shutdown of the federal government in December. Yet even amidst the big declines in the broader market, some stocks attracted positive interest and rose significantly. NIO (NIO -1.66%), Resolute Energy (NYSE: REN), and Zayo Group Holdings (ZAYO) were among the best performers on the day. Below, we'll look more closely at these companies to tell you why their share prices did so well.

NIO wins praise from an unusual source

NIO climbed 7% as the Chinese electric car manufacturer benefited from some rare positive comments from an analyst known best for taking short positions on stocks. Andrew Left of Citron Research issued a favorable report about NIO, setting a price target of $12 per share and arguing that the automaker's management has done an exceptionally good job so far of building brand awareness and a reputation for high quality at an early stage in its lifespan. Some onlookers fear that China's recent economic hiccups could hurt demand for upscale consumer goods, but NIO's sales figures remain encouraging. In addition, the Chinese government's desire to reduce air pollution could lead it to institute more favorable policies toward electric vehicles.

Blue car with doors opening upward to the side.

Image source: NIO.

Resolute gets a bid

Resolute Energy jumped 14% after the oil and gas exploration and production company got a buyout offer from peer Cimarex Energy (XEC). The $1.6 billion bid would give Resolute investors the choice to receive either $35 in cash, 0.3943 shares of Cimarex stock, or a 60%/40% mix of 0.2366 shares of Cimarex plus $14 in cash for every share of Resolute stock they own. Activist shareholders have been pushing Resolute's management toward a strategic move along these lines; the benefits from Cimarex's perspective are that a deal would add to its position in the Delaware Basin area of West Texas, which has looked increasingly promising recently. In short, the proposed acquisition looks like a win-win.

Is Zayo a target?

Finally, Zayo Group Holdings rose 10%. A number of prominent private equity investors are looking at putting together a buyout offer for the communications infrastructure specialist, according to reports compiled by Bloomberg. The companies named as being involved -- among them, KKR, Blackstone Group, and several other institutional investors -- didn't explicitly comment on Bloomberg's article. However, challenging conditions recently led Zayo management to contemplate splitting the company into two pieces -- one to concentrate on enterprise solutions, and the other to own infrastructure assets. A private equity deal could provide an attractive alternative, so it'll be interesting to see if any firm offer results from the rumored discussions.

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Stocks Mentioned

Zayo Group Holdings, Inc. Stock Quote
Zayo Group Holdings, Inc.
Nio Inc. Stock Quote
Nio Inc.
$21.36 (-1.66%) $0.36
Cimarex Energy Co. Stock Quote
Cimarex Energy Co.

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