Here’s Why Adeptus Health, Weatherford, U.S. Silica Holdings, and Two More Are Deep in the Red

After trending lower from open, the market is trying to make a comeback of sorts. The Dow Jones index is just down 23 points while the S&P is off a third of a percentage point. Among the stocks that are deep in the red this afternoon are Adeptus Health Inc (NYSE:ADPT), Weatherford International Plc (NYSE:WFT), Fairmount Santrol Holdings Inc (NYSE:FMSA), U.S. Silica Holdings Inc (NYSE:SLCA), and Hi-Crush Partners LP (NYSE:HCLP).

Let’s dive in and analyze why each equity is lower and examine hedge fund sentiment towards the five using the latest 13F filings.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

Adeptus Health Inc (NYSE:ADPT) shares are 32% in the red after the company disclosed that it has retained a financial advisor, Houlihan Lokey Capital, to advise on potential strategic alternatives. According to Reuters, the company’s affiliates have also entered into an amendment with creditors to provide additional extensions of credit in aggregate of around $7.5 million. The bridge loans mature March 31, 2017. Of the 742 elite funds we track, 12 funds owned $49.42 million of Adeptus Health Inc (NYSE:ADPT) and accounted for 30.60% of the float on December 31, versus 13 funds and $183.86 million respectively on September 30.

Weatherford International Plc (NYSE:WFT) has fallen by 6% today due to low oil prices. With WTI below $48 per barrel, some traders are afraid that new drilling might slow down as E&P’s take a more cautious stance toward production. If drilling slows, demand for Weatherford services could be negatively affected. The number of elite funds with holdings in Weatherford International Plc (NYSE:WFT) fell by 4 quarter-over-quarter to 27 at the end of December.

On the next page, we find out why Fairmount Santrol Holdings Inc, US Silica Holdings Inc, and Hi-Crush Partners LP are in the red.
Fairmount Santrol Holdings Inc (NYSE:FMSA), U.S. Silica Holdings Inc (NYSE:SLCA), and Hi-Crush Partners LP (NYSE:HCLP) are each lower by around six to seven percent this afternoon as traders take a more cautious stance on the sector. Although fracking sand producers have surged from their lows last year, shale production growth is no longer guaranteed given the softer WTI prices. If shale production slows, demand for fracking sand could also slow and the recent sand price raises could head in the opposite direction. Given the massive gains from last year, some investors are no doubt taking some profits off the table to manage risk. At this point, no one really knows where oil prices will go. Of the three, U.S. Silica Holdings Inc (NYSE:SLCA) is the most popular, with 43 top funds reporting stakes at the end of December. In second place is Fairmount Santrol Holdings Inc (NYSE:FMSA), with 30 top funds and Hi-Crush Partners LP (NYSE:HCLP) rounds out the list with 11 elite funds reporting long positions at the end of the fourth quarter.

Disclosure:None