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Why Are These 5 Stocks Deep in the Red Today?

Although the S&P 500 is up by 0.36%, shares of Celator Pharmaceuticals Inc (NASDAQ:CPXX), Ascena Retail Group Inc (NASDAQ:ASNA), Nordstrom, Inc. (NYSE:JWN), Chico’s FAS, Inc. (NYSE:CHS), and Boot Barn Holdings Inc (NYSE:BOOT) are deep in the red this afternoon. Let’s examine the events that have caused investors to sell these stocks and see what the world’s greatest investors think of each of them.

Our research determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details here).

A receding tide sinks all boats, as Ascena Retail Group Inc (NASDAQ:ASNA) shares are down by roughly 3%, Nordstrom, Inc. (NYSE:JWN) shares have retreated by 2.3%, and Chico’s FAS, Inc. (NYSE:CHS) shares have shrunk by 2.7%, all primarily due to disappointing sales data from peer Gap Inc (NYSE:GPS). For the month of March, Gap reported net sales of $1.43 billion versus the net sales of $1.53 billion that it reported for March of 2015. The weak results translate to a roughly 6% decline in comparable sales and sent Gap shares down by more than 13% today. Investors fear that the weak demand for Gap’s products could translate to weaker demand for the broader industry as a whole.

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The number of elite funds in our database invested in Ascena Retail Group Inc (NASDAQ:ASNA) rose by three to 26 during the fourth quarter. Alexander Medina Seaver‘s Stadium Capital Management was the largest shareholder of the stock among those 26 investment firms, holding 9.23 million shares. Meanwhile, 29 funds held $208.55 million worth of Nordstrom, Inc. (NYSE:JWN) shares at the end of the fourth quarter. That marked a large decline from 38 funds with $840.88 million in shares at the end of the third quarter. Lastly, the number of elite funds long Chico’s FAS, Inc. (NYSE:CHS) stood at 22 at the end of December, down by over the fourth quarter. Those funds, which included Jim Simons’ Renaissance Technologies and Cliff Asness‘ AQR Capital Management, owned 14.9% of the Chico’s float.

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On the next page we examine why Boot Barn Holdings and Celator Pharmaceuticals are in the red this afternoon.

Analyst downgrades can have a lot of bite, as Boot Barn Holdings Inc (NYSE:BOOT)‘s price action has shown today. Shares of Boot Barn Holdings Inc (NYSE:BOOT) are down by roughly 15% after JP Morgan’s Matthew R. Boss downgraded the stock to ‘Neutral’ from ‘Overweight’ and cut his price target on it to $7 per share from $11. Boss downgraded Boot Barn Holdings because his field research has suggested that the apparel segment has slowed sharply in the latter half of March and remains weak in early April, despite the favorable weather and strong economy. Boss wrote:

“Our multi-region checks point to moderating top-line trends in 2H March (& 1Q17-to-date) with elevated promotional activity across both apparel and boots (we estimate ~25% of the store with some level of markdown exceeding BOOT’s 90%/10% full-price to promotion target model structure) and rising levels of clearance inventory (apparel/accessories).”

The increased promotional activity could translate to weaker than expected earnings. Three funds in our database held roughly 5.3% of Boot Barn Holdings Inc (NYSE:BOOT)’s float as of the end of December.

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Lastly, biotech momentum stock Celator Pharmaceuticals Inc (NASDAQ:CPXX) is off by 7.2% this afternoon on moderate volume on the back of profit taking and broader biotech weakness. Given that shares of the stock have surged from $2 in early March to over $12 as of today, some investors are likely just taking some money off of the table. The iShares Nasdaq Biotechnology (IBB) is also off by roughly 1.6% this afternoon. Three elite funds that we track held 3% of the company’s float as of December 31. Furthermore, after Celator Pharmaceuticals Inc (NASDAQ:CPXX) surged on March 15, Steve Cohen’s Point72 Asset Management initiated a stake in the company consisting of 2.86 million shares.

Disclosure: None