Markets are trading on an optimistic note as all the major indices are in green zone. The major push for the markets comes from Hillary Clinton being seen as winner of the second presidential debate. European markets, on the other hand, remained week over the fears of a German bank crisis.
However, in the bullish market, a number of stocks have lost ground today, including Bristol-Myers Squibb Co (NYSE:BMY), Telefonica Brasil SA (ADR) (NYSE:VIV), Dover Corp (NYSE:DOV), Myriad Genetics Inc. (NASDAQ:MYGN), and Ocean Power Technologies Inc. (NASDAQ:OPTT). In this article, we are going to discuss the news that sent these stocks lower today and will analyze the hedge fund sentiment towards them.
At Insider Monkey, we track around 750 hedge funds and other 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).
Bristol-Myers Squibb Co (NYSE:BMY) stock plunged 9% as its main rival Merck reported positive lung cancer drug results. Merck’s Keytruda drug which is used for treating non-small-cell lung cancer, showed better overall survival at 18 months vis-à-vis standard care. On the other hand, Bristol-Myers Squibb yesterday presented negative late stage trial results for its Opdivo drug, which is designed to treat the same disease. Among the funds we track, 61 funds held $2.37 billion worth of Bristol-Myers Squibb Co (NYSE:BMY)’s stock at the end of June, compared to 59 investors that held $2.28 billion worth of shares a quarter earlier.
Telefonica Brasil SA (ADR) (NYSE:VIV) stock dropped more than 5% as the company announced the departure of its CEO Amos Genish. However, Genish allayed the fear stating that the company is taking steps to ensure smooth transition to new CEO Eduardo Navarro de Carvalho, who is currently the company’s Chief Commercial Digital Officer and will assume the role on January 1. Genish had assumed the position last year. The number of funds from our database long Telefonica Brasil SA (ADR) (NYSE:VIV) declined by two to 10 during the second quarter, while the total value of their holdings rose to $129 million from $119 million.
On the next page, we are going to discuss the developments that led to the decline of Dover Corp, Myriad Genetics and Ocean Power Technologies.
Dover Corp (NYSE:DOV) stock has sunk 6% so far today, after the company reduced its earnings and revenue forecast. Dover now expects full year EPS in the range of $3.00 to $3.05, down from the previous forecast of $3.35-$3.45. It also expects the revenue decline to be between 4% and 5%, compared to the previous 3%-5% drop. The company’s pending acquisition of Wayne Fueling Systems will likely close in first quarter of 2017 as U.K. regulators decided to refer the acquisition for a Phase II investigation. A total of 22 funds from our database have positions in Dover Corp (NYSE:DOV) worth $869 million as of the end of June, which is higher than $656 million in stock held by 23 funds a quarter earlier.
Myriad Genetics Inc. (NASDAQ:MYGN) stock is trading 7% in the red as the positive results from Tesaro Inc (NASDAQ:TSRO) cancer drug were announced over the weekend (see details). The trial results from Tesaro’s experimental drug for ovarian cancer have questioned the need for a companion test made by Myriad Genetics. However, the benefits of Tesaro drug for patients which tested negative on Myriad Genetics test were much smaller than the benefits shown by positively tested patients. At the end of June, 28 funds tracked by us owned shares of Myriad Genetics Inc. (NASDAQ:MYGN) worth $513 million in aggregate, which compares to 21 funds and $638 million, respectively, a quarter earlier.
Ocean Power Technologies Inc. (NASDAQ:OPTT) stock has dipped by 6% on the back of the company announcing its new underwritten public offering of 2.5 million shares of its common stock. Underwriters will be able to acquire an additional 375,000 shares. Ocean Power Technologies will use the proceedings for general corporate purposes including further developing, testing and demonstrating PowerBuoy system. Among the funds we track, only Jim Simons’ Renaissance Technologies held around 57,200 shares of Ocean Power Technologies Inc. (NASDAQ:OPTT) at the end of June.
DISCLOSURE – NONE