5 Stocks That Have Kicked Off the Week on a Sour Note

Crude futures and all three indexes are lower today as investors remain in a risk-off posture before the FOMC meeting later this week and the Brexit vote on the 23rd of this month. Among the stocks deep in the red on Monday are Frontier Communications Corp (NASDAQ:FTR), Marinus Pharmaceuticals Inc (NASDAQ:MRNS), Chesapeake Energy Corporation (NYSE:CHK), ArcelorMittal SA (ADR) (NYSE:MT), and Fairmount Santrol Holdings Inc (NYSE:FMSA). Let’s find out why traders are selling off these equities and see what the smart money thinks of each stock.

Our research determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details here).

Technical Selling Detected at Frontier 

Frontier Communications Corp (NASDAQ:FTR) is 1.2% in the red due to technical selling. Shares of the telecom have been in a downtrend since the beginning of May and its stock price is below several key moving averages. Also hurting today’s performance is the stock’s dividend payout of $0.105 per share today, which makes the stock performance seem worse than it actually is. Of the 766 elite funds that we track, 27 funds owned $302.74 million of Frontier Communications Corp (NASDAQ:FTR) shares on March 31, down from 31 funds with $342.27 million in holdings on December 31.

Marinus Drops on Study Results

Marinus Pharmaceuticals Inc (NASDAQ:MRNS) shares have plunged by almost 70% after a Phase 3 trial showed that the company’s lead product candidate, Ganaxolone, failed to demonstrate statistically significant superiority over a placebo, concerning the change in seizure frequency over 28 days. Investors had hoped Ganaxolone would be a potential treatment for drug-resistant focal onset seizures in adults. Due to the results, Marinus will terminate development for that particular indication and will instead focus efforts on Ganaxolone for the potential treatment of status epilepticus and pediatric orphan seizure and behavior disorders. Three funds in our database held shares of Marinus Pharmaceuticals Inc (NASDAQ:MRNS) at the end of March.

On the next page we examine why Chesapeake Energy, ArcelorMittal SA (ADR), and Fairmount Santrol Holdings are losing ground today.

Chesapeake Lower on Weaker Crude

Chesapeake Energy Corporation (NYSE:CHK) is 1% lower on the back of lower crude prices. July 2016 WTI futures are off by 0.57% this afternoon due to the ‘risk off’ sentiment among investors ahead of this week’s FOMC meeting and June 23’s Brexit vote. If the Federal Reserve surprises and raises rates or if Britain leaves the EU, the dollar could strengthen and demand for crude could decline. If that happens, the bullish supply developments over the past few months could be overshadowed by the drop in demand and the bearishness due to speculation. The number of funds in our system with shares of Chesapeake Energy Corporation (NYSE:CHK) in their portfolios dropped by one during the March quarter, to 31.

Profit Taking at ArcelorMittal 

ArcelorMittal SA (ADR) (NYSE:MT) is off by around 2% this afternoon due to profit taking. Given that the stock has rallied strongly since mid-February, some traders are selling to lock in profit and to de-risk their position. Other traders are selling due to concerns that a Brexit or a weak Chinese economy could cause global demand to decline. Jim Simons‘ Renaissance Technologies owned more than 5.00 million shares of ArcelorMittal SA (ADR) (NYSE:MT) at the end of the first quarter.

Fairmount Santrol Drops on Downgrade

Fairmount Santrol Holdings Inc (NYSE:FMSA) is 6% lower today after analysts at DA Davidson lowered their rating on the stock to ‘Underperform’ from ‘Buy’. Given that WTI prices have dropped below the $50 per barrel mark, demand for fracking sand might not be as strong as the market is pricing at current WTI prices. Given Fairmount Santrol Holdings Inc (NYSE:FMSA)’s strong rally in recent weeks, profit taking could also be another reason for today’s sell-off. Six funds tracked by Insider Monkey held shares of Fairmount at the end of March.

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