What Sent These Five Stocks Lower on Monday?

The US stock market started the last trading week of 2015 on a slightly negative note, with major indices losing ground on Monday. Among thousands of stocks,  Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Chimerix Inc (NASDAQ:CMRX), Iconix Brand Group Inc (NASDAQ:ICON), Chesapeake Energy Corporation (NYSE:CHK), and Freeport-McMoRan Inc (NYSE:FCX) have depreciated significantly on the back of different events. Let’s take a closer look at the developments that sent these stocks lower on Monday and see what the funds from our database think about them.

At Insider Monkey, we track over 730 hedge funds and other institutional investors. By analyzing their quarterly 13F filings we determine the stocks that they are collectively bullish on, which allows us to mimic some of these picks and beat the market. Our focus is the small-cap picks of the investors we track and by imitating the 15 most popular small-cap stocks among these funds we have managed to generate returns of around 102% since August 2012, outperforming the S&P 500 ETF (SPY) by some 53 percentage points (see more details here).

Let’s start with Valeant Pharmaceuticals Intl Inc (NYSE:VRX), whose stock is down by around 10% after news that its CEO Michael Pearson was hospitalized due to pneumonia. A group of executives will take Pearson’s role until he recovers, the company said. Today’s drop ended several days of gains that slightly offset the losses registered in the past several months. In this way, Valeant Pharmaceuticals Intl Inc (NYSE:VRX)’s stock is down by more than 50% in the last six months and has lost 28% since the beginning of the year. Despite the decline registered by the stock, most smart money investors remain optimistic about Valeant Pharmaceuticals Intl Inc (NYSE:VRX) that has also two activists among its top shareholders. Bill Ackman‘s Pershing Square and Jeff Ubben’s ValueAct Capital are two of the 88 funds from our database that are long Valeant as of the end of September, down by 98 funds a quarter earlier.

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Then there is Chimerix Inc (NASDAQ:CMRX), whose shares are over 80% in the red on the back of the disappointing results of Phase 3 trial SUPPRESS its oral antiviral drug brincidofovir that was tested in patients undergoing hematopoietic cell transplantation. According to the company, brincidofovir did not manage to achieve the primary endpoint for the prevention of cytomegalovirus infection (a member of the herpes virus family) in 24 weeks since the transplant.

“Preliminary analysis suggests that the primary endpoint failures in both the prevention of CMV infections and mortality in the brincidofovir arm were driven by confirmed cases of graft-versus-host-disease (GVHD),” the company said in a statement.

Among the funds we follow, Chimerix Inc (NASDAQ:CMRX) is not very popular with only 17 funds reporting long positions in the last round of 13F filings, amassing around 12% of its outstanding stock. Healthcare-focused funds Jeremy Green’s Redmile Group and Samuel Isaly’s OrbiMed Advisors are among the company’s top shareholders, owning 1.07 million shares and 1.02 million shares, respectively.

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On the next page, we are going to discuss what led to the decline of the other three stocks.

Iconix Brand Group Inc (NASDAQ:ICON)‘s stock has lost 23% so far today after the reports emerged that the company is being investigated by the US Securities and Exchange Commission in relation to accounting issues related to some of its joint ventures. The company has to restate several of its financial statements since 2013, as it stated earlier in November (the announcement on November 6 sent the stock 57% lower). Overall, Iconix Brand Group Inc (NASDAQ:ICON)’s stock is 83% in the red year-to-date and its popularity among the funds we track also plunged with 11 funds holding around 24% of the company’s outstanding stock at the end of September, versus 18 funds a quarter earlier.

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With oil down by over 3% earlier today on the back of fears about an extended oversupply, Chesapeake Energy Corporation (NYSE:CHK)‘s stock has declined by another 8% today, which erased the gains of the previous couple of days and sent the stock 79% down year-to-date. The company is currently working with Evercore on identifying solutions to reduce its huge pile of debt as natural gas and oil prices are forecasted to stay low in the near future. Not helping oil and gas prices was the warm weather that reduced the demand for natural gas in the US and Canada. Among the funds we follow, 34 investors reported holding shares of the company in their latest 13F filings for the end of September, slightly up from 33 a quarter earlier.

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Finally, Freeport-McMoRan Inc (NYSE:FCX)‘s shares have fallen by almost 8% after the company said that its Chairman of the Board and co-founder James R. Moffett is going to resign from the board of directors. Moffett will become a consultant to the board. The company added that Gerald J. Ford was elected as Non-Executive Chairman. A couple of months ago, activist Carl Icahn took an 8.8% stake in Freeport-McMoRan Inc (NYSE:FCX) and in October, the investor said that he intended to pursue the company to reduce the number of directors to 11 and to appoint two representatives on the board. Overall, 44 funds among those we track reported long positions in Freeport-McMoRan Inc (NYSE:FCX) as of the end of the third quarter.

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