Why Shares of StemCells, Coca-Cola Enterprises & Three Other Companies Tumbled Today

Markets are mixed on Tuesday trading, even though May economic figures came in ahead of expectations, and oil and gold are trading up. However, major U.S. stock indexes all seem on track to closing the month up, marking the third consecutive month of gains. Among the stocks in the spotlight on Tuesday are StemCells Inc (NASDAQ:STEM), Coca-Cola Enterprises Inc (NYSE:CCE), Chemours Co (NYSE:CC), Hewlett Packard Enterprise Co (NYSE:HPE) and Fidelity & Guaranty Life (NYSE:FGL), all of which are posting losses in the afternoon hours. So, let’s take a look into the events driving these moves, and into what the hedge funds in our database think about the companies in question.

At Insider Monkey, we track around 760 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 more details about our small-cap strategy).

StemCells Plummets On Study Termination

Let’s start with StemCells Inc (NASDAQ:STEM), whose stock is down by more than 80% on Tuesday afternoon, following the announcement of the termination of the company’s Phase II Pathway Study in spinal cord injury. The decision was prompted by the analysis of data from the study, which showed that, while StemCells’ proprietary cells treatment generated an improvement in patients, “the effect and the perceived trend of the effect over time did not justify continuing the study or exploring the variability in the initial patient observations, given the financial resources available to the Company,” a press release explained. Nano-cap StemCells Inc (NASDAQ:STEM) counted five hedge fund supporters -among the funds that we track- at the end of the first quarter of 2016. Among the largest shareholders was Nathan Fischel’s DAFNA Capital Management, which disclosed ownership of 699,563 shares of the company – which equated to 58,297 shares following the 1:12 reverse stock split implemented on May 9.

Coca-Cola European Partners Tumbles On Debut

Next up is Coca-Cola European Partners, formerly Coca-Cola Enterprises Inc (NYSE:CCE), and still trading under this name on the NYSE, whose stock has lost more than 24% since the opening bell, following the completion of the merger between three The Coca-Cola Co (NYSE:KO) bottlers – Coca-Cola Enterprises, Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetränke GmbH. The new, London-based bottler is now the largest independent bottler for Coca-Cola from a revenue perspective. A total of 30 funds among those we track were long the pre-merger Coca-Cola Enterprises Inc (NYSE:CCE) at the end of the fist quarter – it should be noted, however, that the merger was agreed upon in October of 2015. Their stakes accounted for more than 7% of the company’s shares outstanding; First Eagle Investment Management alone held more than 2% of the float, having declared ownership of 4.75 million shares, worth $241 million, as of the end of March.

Technical Selling Continues In Chemours

Shares of Chemours Co (NYSE:CC) are trading down by roughly 4.75% on Tuesday, driven by what seems like technical selling. Shares of the performance chemicals provider spiked more than 234% between January 28 and May 17. However, since this last date, the stock has lost over 16.6% of its value, as the price hit what looks like a resistance point right below $10. Once again, 30 funds among those we track were long Chemours Co (NYSE:CC) at the end of the first quarter. Their combined stakes amounted to more than 24% of the company’s float. The second-largest institutional shareholder of record, trailing only the Vanguard Group, was David Einhorn’s Greenlight Capital, which increased its exposure to the stock by 161% over the first quarter, taking its holdings to 8.84 million shares, worth almost $62 million by March 31.

Hewlett Packard Enterprise Slips Slightly On Litigation

Also down on Tuesday trading is Hewlett Packard Enterprise Co (NYSE:HPE), which tumbled more than 1.3% in the morning, before recuperating some of the lost ground. The shares are down about 0.6% by 1:45 pm, as the company presents its opening arguments in a case against its former partner Oracle Corporation (NYSE:ORCL), for its alleged responsibility in the failure of one of the company’s (formerly Hewlett-Packard Co.) most profitable products. Hewlett Packard Enterprise is seeking $3 billion in damages from Oracle. Hewlett Packard Enterprise Co (NYSE:HPE) saw the number of hedge funds in our database long its stock advance by almost 11% over the first quarter of 2016. On March 31, 51 funds held more than 7% of its float, with David Cohen and Harold Levy’s Iridian Asset Management alone owning more than 1.5% of the total shares outstanding – the stake comprised 27.5 million shares.

Fidelity & Guaranty Life Acquisition Is Off For Now

Finally, there’s Fidelity & Guaranty Life (NYSE:FGL), whose shares are down about 4.5% on Tuesday afternoon, after Chinese company Anbang Insurance Group Co. retracted its request with the New York Department of Financial Services to acquire the insurer – mainly due to the regulators’ reservations. However, the Asian group said it plans to file another application in the future. Fidelity & Guaranty Life (NYSE:FGL) counted 11 hedge fund supporters in our database, including Jim Simons’ Renaissance Technologies, which boosted its stake by 174% over the quarter, disclosing ownership of 296,600 shares, or $7.78 million in stock, as of the end of March.

 Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.