At a time when crude futures are in the green and the major indexes are flat, shares of five stocks, Catabasis Pharmaceuticals Inc (NASDAQ:CATB), Flexion Therapeutics Inc (NASDAQ:FLXN), DryShips Inc. (NASDAQ:DRYS), Sunoco LP (NYSE:SUN), and Fibrocell Science Inc (NASDAQ:FCSC) are sharply down today. Let’s find out why traders are selling off these equities and see how the smart money is positioned in them.
At Insider Monkey, we track around 765 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).
Catabasis Pharmaceuticals Retreats on Clinical Results
Catabasis Pharmaceuticals Inc (NASDAQ:CATB) is 26% lower today after a Phase 2a trial showed that the company’s drug candidate CAT-2054 failed to achieve the study’s primary endpoint of statistically lowering bad cholesterol compared to a placebo. Non-HDL and triglyceride did not change statistically either. Catabasis will stop investing in CAT-2054 for the treatment of hypercholesterolemia as a result. The company will continue to focus on CAT-2054 for the indication of non-alcoholic steatohepatitis, however. Three funds that we track owned 10.7% of Catabasis Pharmaceuticals Inc (NASDAQ:CATB)’s shares at the end of March, out of 766 funds in Insider Monkey’s database.
Flexion Raises Money
Flexion Therapeutics Inc (NASDAQ:FLXN) shares have retreated by 11% after the company announced that it will start a $60 million public offering of stock. The underwriters have a 30-day option to buy another $9 million of additional shares. Wells Fargo, RBC, and BMO are the joint book runners. The exact pricing of the offering hasn’t been released yet. Ten funds in our system were long Flexion Therapeutics Inc (NASDAQ:FLXN) at the end of the first quarter.
On the next page we examine why shares of DryShips Inc, Sunoco LP, and Fibrocell Science Inc are sinking today.