Oil continues to tumble on Thursday, driven by a strengthening dollar and record high stockpiles in the U.S, pushing the commodity back below the $40 a barrel threshold. Along with oil, gold is also down, which has conspired to push down the stock markets. Among the most relevant decliners, investors can count Portola Pharmaceuticals Inc (NASDAQ:PTLA), Paypal Holdings Inc (NASDAQ:PYPL), Antero Midstream Partners LP (NYSE:AM), Lannett Company, Inc. (NYSE:LCI), and California Resources Corp (NYSE:CRC). Let’s take a look into the events driving these drops, and see what the hedge funds in our database think about these companies.
Our research determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).
Let’s start with Portola Pharmaceuticals Inc (NASDAQ:PTLA), which is down by more than 25% this morning after the company revealed that its blood-clot treatment, betrixaban, showed no statistical difference in treating the condition versus the current standard of care, Lovenox. Before the phase 3 trial results were released, trading of the shares was halted at 6:55 am this morning. Taking into account today’s 25% tumble, the stock has lost more than 57% since the beginning of the year.
Among the funds that we track, 24 were long Portola Pharmaceuticals Inc (NASDAQ:PTLA) at the end of the fourth quarter, with their aggregate stakes accounting for almost 20% of the company’s total shares. The largest position was that of Israel Englander’s Millennium Management, which disclosed ownership of 1.64 million shares, valued at $84.78 million on December 31.
Next up is Paypal Holdings Inc (NASDAQ:PYPL), which is trading down by roughly 4.8% after research firm Sterne Agee initiated coverage on the stock with a ‘Neutral’ rating and $45 price target, while Piper Jaffray’s Gene Munster reiterated an ‘Underweight’ rating and $33 price target on it. The latter cited a Re/code report issued Wednesday which said that Apple Pay will be expanding to mobile sites before the holiday shopping season, allowing shoppers to complete purchases simply by pressing their thumbs onto the fingerprint-reading iPhone and iPad screens. This is worrying because according to Munster’s calculations, at least 20% of Paypal’s total payments volume last year was conducted on Apple mobile devices. For its part, Sterne Agee pointed out the potential risks to the company’s leading position in the eCommerce arena over the long-term.
Future challenges aside, Paypal Holdings Inc (NASDAQ:PYPL) is quite popular among institutional investors. 84 funds in our database held long positions in the stock by the end of the fourth quarter, holding approximately 12.4% of the company’s outstanding shares. Among the funds we keep track of, Carl Icahn’s Icahn Capital LP owned the largest stake, comprising 46.27 million shares worth more than $1.6 billion on December 31.
Three more of the day’s biggest losers are discussed on the next page.
Shares of Antero Midstream Partners LP (NYSE:AM) are trading down by almost 13% today on the announcement of a secondary offering of common stock. On early Thursday, the company said it would be pricing an underwritten public offering of 8 million common units (representing limited partner interests) at $22.40 per unit. However, the proceeds of approximately $179 million (before fees) will go to Antero Resources Corp (NYSE:AR), which will then own roughly 62% of the partnership’s outstanding common and subordinated units.
Among the funds that we track, only four were long Antero Midstream Partners LP (NYSE:AM) at the end of the fourth quarter. While all quite small, the largest stake was the one held by Dmitry Balyasny’s Balyasny Asset Management, which comprised 162,532 shares valued at $3.7 million.
Another decliner in Thursday trading is Lannett Company, Inc. (NYSE:LCI), which is down by almost 9% after the company lowered its 2016 guidance and had its rating downgraded to ‘Sell’ from ‘Buy’ by Canaccord analysts. Citing a sluggish generic drug market and the delay of a few product launches, the company said it now anticipates 2016 revenue to come in between $555 million and $565 million, down from its previous projection of $585 million-to-$595 million. Management also cut other estimates, including that for gross margin, which they now envision at 60.5%-to-61.5%, down from 62.0%-to-63.0%
Over the fourth quarter, hedge fund support for Lannett Company, Inc. (NYSE:LCI) fell by 41.1%. However, 17 funds in our database were still long the stock at the end of the period. A noteworthy position was that of Mitchell Blutt’s Consonance Capital Management, which held 1.31 million shares valued at more than $52 million on December 31.
Finally, there’s California Resources Corp (NYSE:CRC), which is down by roughly 3.85% today, driven by the decline in oil prices. As stated above, crude is now trading below $40 a barrel; WTI Crude is down by 2.75% to $38.69, while Brent Crude is down by 1.85% to $39.72. Other E&P stocks falling on Thursday include EOG Resources Inc (NYSE:EOG), down by 1.6%, and Anadarko Petroleum Corporation (NYSE:APC), down by almost 3%.
29 funds in our database were long California Resources Corp (NYSE:CRC) at the end of the fourth quarter. Their aggregate stakes, valued at more than $237 million at that time, accounted for more than 26% of the company’s outstanding stock. The largest stake was held by Eric W. Mandelblatt’s Soroban Capital Partners, which held 33.45 million shares of the company, valued at almost $78 million on December 31. However, on January 29, the fund disclosed a marked reduction in its exposure to the company, with its holding having been slashed to just 3.94 million shares at that time.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned in this article.