Freeport-McMoRan's Grasberg copper mine. Image: Freeport-McMoRan.
Wednesday continued the late Santa Claus rally that investors have seen all week, with major market benchmarks reacting to sustained gains in the energy sector. Inventory figures showed unexpectedly bullish results, and that helped pull oil prices up nearly 5% on the day, reversing a trend that had taken crude down below $35 per barrel. The Dow and S&P 500 rose between 1% and 1.25% on the day, but several stocks did far better. Freeport-McMoRan (FCX 3.87%), Adamas Pharmaceuticals (ADMS +0.00%), and Denbury Resources (DNR +0.00%) were some of the stronger performers in the stock market on Wednesday.
Freeport-McMoRan jumped 16% on a strong day for both of its key segments. The prospects for Freeport's energy segment looked better with the recovery in the price of crude, especially if it could potentially signal further gains that could avoid the need for future impairments of its oil and natural gas assets in the next couple of quarters. Moreover, signs of stabilizing economic conditions in China and improving demand for industrial metals in the U.S. helped raise hopes that copper prices could recover in 2016 from their big losses this year, and that would bode well for the other half of Freeport's business. Given the level of debt that Freeport is carrying, any support it can get in either of its businesses is good news for hard-hit shareholders, who are still dealing with major losses for the year even after Wednesday's bounce.
Adamas Pharmaceuticals soared 83% after the specialty pharmaceutical company released favorable data from a Phase 3 study of its ADS-5102 amantadine HCl treatment for a type of dyskinesia associated with Parkinson's disease. The study results showed a statistically significant reduction in levodopa-induced dyskinesia for patients who received the drug candidate compared to a placebo at 12 weeks, and it was maintained at the 24-week mark as well. CEO Dr. Gregory Went expressed his pleasure at the results, saying that "with these data in hand, we look forward to talking with the FDA about our planned NDA submission for ADS-5102." With no FDA-approved treatments for this type of dyskinesia currently on the market, Adamas has a huge opportunity to be the first-mover in a significant market and reap the rewards if future data support its conclusions.
Finally, Denbury Resources climbed 21%. In addition to benefiting from the rise in energy prices today, Denbury continued to rise on prospects that it will be able to handle its debt load long enough to survive the downturn in the industry. Earlier this week, Denbury announced that it would offer to exchange outstanding senior subordinated notes for new seven-year notes, with the hope that investors will accept a 35% to 40% discount in exchange for climbing to a higher priority for repayment in case of default. With smart capital moves like this, Denbury is making the most of the tough business environment for energy investors. In the long run, if energy rebounds, Denbury's efforts should pay off with greater profits for those who stayed the course.
