Although all three major indexes have rebounded into the green this afternoon, shares of five companies, Amgen, Inc. (NASDAQ:AMGN), Esperion Therapeutics Inc (NASDAQ:ESPR), The Medicines Company (NASDAQ:MDCO), AmTrust Financial Services Inc (NASDAQ:AFSI), and Bank of America Corp (NYSE:BAC) are in the red. In this article, let’s find out what is causing each stock to fall and analyze elite fund sentiment towards them.
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).
Amgen, Inc. (NASDAQ:AMGN) has fallen more than 6% after the company released the results from the FOURIER study of Repatha. Although the study met the key endpoint, expectations of risk reduction (of 20-22% versus placebo versus the actual result of 15%) were apparently higher for the cholesterol lowering drug. Given that Repatha is a very expensive drug, many thought the results had to be very convincing, rather than just convincing for the drug to be a market success. Due to the news, Michael Yee of RBC Capital thinks Amgen shares might not rally in the short term, but will eventually grind back higher over time. Of the 742 elite funds we track, 60 funds owned $1.96 billion of Amgen, Inc. (NASDAQ:AMGN) and accounted for 1.80% of the float on December 31, versus 59 funds and $1.86 billion respectively on September 30.
Esperion Therapeutics Inc (NASDAQ:ESPR) and The Medicines Company (NASDAQ:MDCO) are both down due to the previously mentioned Amgen news. Both companies are trying to bring drugs that reduce cardiovascular disease to the market. Both companies have also been defended by analysts today. In terms of Esperion, Chad Messer of Needham thinks the sell-off is unwarranted as he thinks the company’s Bempedoic acid will be lower priced, and thus less comparable to Repatha. Meanwhile, Joseph Schwartz of Leerink reaffirms his ‘Outperform’ rating on The Medicine Co, citing Repatha’s clear clinical benefit, which could potentially lead to inclisiran being clinically successful as well. 8 and 23 elite funds were long Esperion Therapeutics Inc (NASDAQ:ESPR) and The Medicines Company (NASDAQ:MDCO) at the end of December, respectively.
On the next page, we find out why AmTrust Financial Services Inc and Bank of America Corp are in the red.
AmTrust Financial Services Inc (NASDAQ:AFSI) shares are off 17% after the it disclosed that ‘additional time is needed for the Company to complete its consolidated financial statements and assessment of internal controls over financial reporting for the fiscal year ended December 31, 2016, and, as a consequence, for the Company’s auditor, KPMG LLP, to complete its audit procedures and audit of the consolidated financial statements included in the Form 10-K. Accordingly, the Company will file its Form 10-K for the year ended December 31, 2016 as soon as practicable.’ Given that shareholders dislike uncertainty, AmTrust is off substantially. 21 elite funds had a bullish position in AmTrust Financial Services Inc (NASDAQ:AFSI) at the end of December, down one from the previous quarter.
Bank of America Corp (NYSE:BAC) shares are off by 1% due to profit taking. Given the huge run-up since the November election and the fact that the Federal Reserve has implied only two more rate hikes in 2017, many bulls are taking some money off the table as a big chunk of the good news has already been priced in. Although many believe shares are still a good long term buy and the stock could still rally in the short term, some traders are being a little bit cautious for now. 139 elite funds owned shares of Bank of America Corp (NYSE:BAC) as of the most recent 13-F reporting period, up 27 funds from the previous quarter.