At a time when the Dow is up by 65 points, the Nasdaq is flat, and the S&P is 0.25% in the green, shares of five companies are getting battered in afternoon trading.
In this article, we’ll check out why shares of VASCO Data Security International, Inc. (NASDAQ:VDSI), Acadia Healthcare Company Inc (NASDAQ:ACHC), Spherix Inc (NASDAQ:SPEX), ContraVir Pharmaceuticals Inc (NASDAQ:CTRV), and Rite Aid Corporation (NYSE:RAD) are taking it on the chin today and examine relevant hedge fund sentiment towards each of the five stocks.
At Insider Monkey, we track over 750 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).
VASCO Data Security International, Inc. (NASDAQ:VDSI) shares have plunged by 14% after the company announced its preliminary third quarter results. For the period, VASCO expects adjusted EPS of $0.07-to-$0.09 on revenue of $42 million-to-$44 million. VASCO also cut its guidance for the full year to revenue of $185 million-to-$195 million, down by $20 million on both ends of the range. Operating margin for the year is also expected to be lower than the previously communicated range of 10%-to-12%.
“Our third quarter results were negatively impacted primarily by the extension of sales cycles in the European region as some of our large banking customers are adapting to market pressures and the need for digital transformation. As a result, they are delaying the placement of orders until future quarters,” CEO T. Kendall Hunt said.
Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 14 funds owned $66.72 million in VASCO Data Security International, Inc. (NASDAQ:VDSI) shares at the end of June, which accounted for 10.10% of the float.
Acadia Healthcare Company Inc (NASDAQ:ACHC) is 10% in the red after the company announced that it has signed a definitive agreement to sell 21 existing behavioral health facilities and one unopened facility, which together have around 1,000 total beds between them. BC Partners will pay about $390 million in cash under current exchange rates for the facilities (the payment being £320 million). Separately, the company also announced its preliminary summary financial results for the third quarter, conveying expectations for revenue to be $735 million for the period, with an adjusted loss from continuing operations of $1.36 per share. The number of funds in our system with holdings in Acadia Healthcare Company Inc (NASDAQ:ACHC) fell by five during the second quarter to 19 at the end of June.
On the next page we’ll find out why Spherix, ContraVir Pharmaceuticals, and Rite Aid are in the red.
Shares of nano-cap Spherix Inc (NASDAQ:SPEX) have retreated by 10% today as traders take profits from yesterday’s 28% jump. Shares of Spherix jumped yesterday and on Monday on the back of a press release concerning the company’s patent infringement litigation.
“In the last six months, we’ve effectuated ten new patent infringement lawsuits against defendants with a combined market capitalization of approximately $48 billion. There are more suits on file now than at any time in the last four years. And while most of these suits are recently filed, we are working with our partner Equitable IP to reach fair and equitable settlements with any licensee. Copies of all ten complaints can be viewed on our website, (www.spherix.com). We anticipate additional suits will be filed before year end,” CEO Anthony Hayes said in the press release.
As with all nano-caps, traders should do due diligence before trading in the company’s shares. None of the funds tracked by Insider Monkey owned shares of Spherix Inc (NASDAQ:SPEX) at the end of the second quarter.
Although there is no fundamental news concerning the company, ContraVir Pharmaceuticals Inc (NASDAQ:CTRV) is down by 8.7% in afternoon trading as traders take some profits from the stock’s recent run-up. Shares of the company have surged over the past four trading sessions after ContraVir released positive interim data for CMX157 for the treatment of HBV infections last week. Despite the downturn today, shares have still nearly doubled in value during the past five trading sessions. ContraVir Pharmaceuticals Inc (NASDAQ:CTRV) shares were not held in any of the equity portfolios of the hedge funds in our database as of June 30.
Rite Aid Corporation (NYSE:RAD) shares are off by 4.4% after the New York Post reported that Kroger Co (NYSE:KR) “is feared to be close to passing” on buying a chunk of the 650 stores Rite Aid and its purchaser Walgreens Boots Alliance Inc (NASDAQ:WBA) need to divest to appease regulators at the DoJ. Walgreens Boots Alliance agreed to buy Rite Aid last year in a deal that values it at $17 billion, though it’s awaiting the government’s approval to consummate the deal. It is unclear at the moment how the Kroger situation will shake out. 50 funds that we track had a long position in Rite Aid Corporation (NYSE:RAD) at the end of June.