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.
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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.
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.