These Four Stocks Are Leading Today’s Losers Pack for Various Reasons

Page 1 of 2

Although the market has regained most of the losses from the opening hour, there are some stocks that have remained deep in red. Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Barrett Business Services, Inc. (NASDAQ:BBSI), AMAYA INC (NASDAQ:AYA) and Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) are leading today’s losers’ pack. Let’s review the recent developments that have prompted investors to shy away from these stocks.


But why do we track hedge fund activity? From one point of view we can argue that hedge funds are consistently underperforming when it comes to net returns over the last three years, when compared to the S&P 500. But that doesn’t mean that we should completely neglect their activity. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. In our back-tests covering the 1999-2012 period hedge funds’ top small-cap stocks edged the S&P 500 index by double digits annually. The 15 most popular small-cap stock picks among hedge funds also bested passive index funds by around 53 percentage points over the 37 month period beginning from September 2012 (read the details here).

Shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) took a hit today, after the company warned investors it expects short term results to be affected by the recent debacle involving Philidor, a mail-order pharmacy chain that helped the Canadian pharmaceutical company to boost sales. Mike Pearson, Chief Excutive Officer of Valeant, said that, although Philidor was responsible for only $190 million or 6.8% of the company’s third quarter revenues, he expects fourth quarter sales to be affected. Valeant has not managed to quantify the effect of the Philidor breakup, but Pearson has promised to offer investors a more meaningful update in December. He is also expecting to replace Philidor within the next 90 days.

Follow Bausch Health Companies Inc. (NYSE:BHC)

One of the most popular stocks among hedge funds, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) could be found in the portfolio of 98 top funds at the end of the second quarter, which together held some 29% of the company’s common stocks. Activist Bill Ackman is a big fan of Valeant, having built over time a stake that amasses 19.4 million shares, while John Paulson followed suit only recently, having boosted his stake by 340% during the second quarter. In its latest 13F filing, Paulson & Co reported ownership of 9 million shares. Needless to say Paulson must bitterly regret the move, following Valeant steep decline in the past three months.

Barrett Business Services, Inc. (NASDAQ:BBSI) tumbled by as much as 35% after news emerged that Johnson & Weaver, LLP, a shareholder rights law firm, is investigating whether Barrett Business Services violated federal law in connection with the company’s recent quarterly financial reports. Moss Adams LLP, a public accounting firm that served as an auditor for Barrett, has sent a letter to the board’s audit committee, stating that the company’s interim consolidated financial statements as of June 30, 2014, cannot be relied upon and has refused to review the company’s 2015 third-quarter results.

Follow Barrett Business Services Inc (NASDAQ:BBSI)

According to our database, only 10 elite funds held a stake in Barrett Business Services, Inc. (NASDAQ:BBSI) at the end of June and together had control over just 7.7% of the outstanding stock. At the end of the second quarter, SG Capital Management, run by Ken Grossman and Glen Schneider, reported a 14% reduction in its holding to 268,434 shares, while Israel Englander went even further and dumped more than 80% of his stake, leaving his fund, Millennium Management, with just 20,529 shares of Barrett.

Page 1 of 2