Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Applied Genetic Technologies Corp (AGTC), Oasis Petroleum Inc. (OAS) & More: A Look at Five Stocks Falling on Tuesday

WTI futures are trading below $45 per barrel today after the IEA made some gloomy comments on demand growth. Perhaps taking its cue from oil, the broader market is also in the red as all three major indexes are off by more than 1.2% in afternoon trading.

Among the stocks that are underperforming the broader markets are Applied Genetic Technologies Corp (NASDAQ:AGTC), Momo Inc (ADR) (NASDAQ:MOMO), Oasis Petroleum Inc. (NYSE:OAS), Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR), and Seadrill Ltd (NYSE:SDRL). In this article, we will take a closer look at the reasons behind the declines of these stocks and assess the smart money sentiment towards them.

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see the details here).

oil, rig, well, gas, oilman, job, russia, fuel, sunrise, power, business, controls, yellow, pump, jack, repairman, male, helmet, orange, drilling, sun, engineer, black, worker,

maradon 333/Shutterstock.com

Applied Genetic Technologies Corp (NASDAQ:AGTC) shares are off by over 32% after the company disclosed slower-than-planned enrollment in its XLRS Phase 1/2 Trial, which Applied Genetic is conducting in collaboration with Biogen Inc (NASDAQ:BIIB). So far in August, the company has eight out of the target number of up to 27 patients enrolled. The delays are due to patients not meeting eligibility criteria and due to the company making a protocol amendment to include the use of prophylactic corticosteroids that required further institutional review board approvals.

“The company has not observed any significant improvements in secondary endpoints in the six patients treated at the lowest dose level group. The company does not expect to report further data on the XLRS study this year, but intends to provide quarterly updates on its patient enrollment,” the company said

The secondary endpoints are measured in part to see if there are any early indications of potential efficacy (they are not as important as the primary endpoints, however). In addition, Applied Genetic’s ACHMB3 Phase 1/2 Trial is also experiencing slower-than-expected enrollment due to vendor errors. A total of 12 funds from our database were long Applied Genetic Technologies Corp (NASDAQ:AGTC) at the end of the second quarter, down by two funds from the previous quarter.

Follow Applied Genetic Technologies Corp (NASDAQ:AGTC)
Trade (NASDAQ:AGTC) Now!

Momo Inc (ADR) (NASDAQ:MOMO) shares have lost 6% so far today due to some profit taking. The stock has done very well year-to-date, having gained 50% before today. Given today’s news from the IEA that Chinese crude demand is somewhat soft, some traders are no doubt connecting the dots and anticipating a slower Chinese economic recovery. If that happens, Momo’s growth might not be as strong in dollar terms. According to our data, the number of elite funds with holdings in Momo Inc (ADR) (NASDAQ:MOMO) fell by 1 quarter-over-quarter to 9 at the end of June.

On the next page, we examine what is going on with Oasis Petroleum, Petroleo Brasileiro SA Petrobras, and Seadrill Ltd.

Energy-related companies, Oasis Petroleum Inc. (NYSE:OAS)Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR), and Seadrill Ltd (NYSE:SDRL) are down by 8%, 5.8%, and 7.7%, respectively, after the International Energy Agency published a softer-than-anticipated outlook on crude demand in the near term. More specifically, the IEA, which advises major nations on energy policy, said:

“Our forecast in this month’s report suggests that this supply-demand dynamic may not change significantly in the coming months. As a result, supply will continue to outpace demand at least through the first half of next year. As for the market’s return to balance — it looks like we may have to wait a while longer.”

One reason for the potentially longer wait for balance is that demand growth from China and India has been weaker than expected. In terms of expectations, the agency cut its 2016 demand growth estimate to 1.3 million barrels per day, down from the previous 1.4 million barrels per day. However, the IEA did maintain its 2017 demand growth estimate of 1.2 million barrels per day.

In terms of individual holdings, John Horseman‘s Horseman Capital Management established a new stake of 7.6 million shares in Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) at the end of June. Overall, 23 funds tracked by us held shares of Petrobras heading into the second quarter, while 17 and 33 funds were long Seadrill Ltd (NYSE:SDRL) and Oasis Petroleum Inc. (NYSE:OAS), respectively.

Follow Oasis Petroleum Inc. (NYSE:OAS)
Trade (NYSE:OAS) Now!

Follow Petroleo Brasileiro Sa Petrobras (NYSE:PBR)
Trade (NYSE:PBR) Now!

Follow Seadrill Ltd (NYSE:SDRL)
Trade (NYSE:SDRL) Now!

Disclosure: none

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.