Stocks To Avoid? Caspian Capital Has New Bets Against These Stocks

Next up is Encore Capital Group, Inc. (NASDAQ:ECPG), in which Caspian held a new position of put options underlying 745,000 shares, with the position having a reported value of $31.84 million as of June 30. Like Nationstar, Encore Capital Group also suffered an early May dip upon the release of its own first quarter earnings report. In contrast however, shares rebounded with a very strong June. Shares of the debt collector are down slightly in the third quarter however. Despite its revenue and earnings meeting expectations in its May 7 earnings report, shares dropped by about 5% the following day, partly because of a downgrade to ‘Hold’ from Zacks. With shares soaring in June, Zacks downgraded the stock again, to ‘Sell’ in early July. Interestingly, there were a number of insider purchases of shares by company executives in early June, just before the spurt in their price, which exemplifies why we track and report on insider trading activity, as such purchases have been correlated with stronger equity returns in research on the subject. Among other purchases, President and CEO Kenneth Vecchione purchased 4,000 shares on June 8. Emanuel J. Friedman’s EJF Capital held the largest position in Encore Capital Group, Inc. (NASDAQ:ECPG) within our database as of March 31, with it consisting of 1.36 million shares, though the position was trimmed by 20% during the first quarter.

Lastly is United States Steel Corporation (NYSE:X), in which Caspian Capital’s position consists of put options underlying 292,000 shares, with a reported value of $6.02 million. A top small-cap pick of Ray Dalio, United States Steel Corporation (NYSE:X) appears to be the surest bet of Caspian without knowing the dates or strike prices of its positions, as shares have very steadily declined since the beginning of June amid weakening commodity prices and fears over a slowing Chinese economy. With steel trading at a six-year low, United States Steel has shed nearly a third of its value, just under 32%, since the beginning of June. The company will report its second quarter earnings on July 29, coming off first quarter earnings that severely disappointed, as the company lost $75 million and sales fell by 26%. Bullish investors like Ken Griffin and Cliff Asness, who held positions of 5.54 million shares and 4.04 million shares respectively as of March 31, likely had their steely resolve in the company tested following those results.

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