Despite the unemployment rate falling to 4.7%, all three indexes are in the red this morning after the Labor Department reported that nonfarm payrolls increased 38,000 versus the 160,000 that many analysts were expecting. The Dow Jones index is down more than 100 points, the S&P is down 0.7% and the NASDAQ index is off almost 1%. Among the stocks that are lower than the index are E*TRADE Financial Corp (NASDAQ:ETFC), Bank of America Corp (NYSE:BAC), Immunomedics, Inc. (NASDAQ:IMMU), Gogo Inc (NASDAQ:GOGO), and Globalstar, Inc. (NYSEMKT:GSAT). Let’s find out why traders are selling and see what the smart money thinks of each stock.
At Insider Monkey, we track around 760 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).
Friday’s Weak Nonfarm Payroll Wrecks Havoc in the Financial Sector
E*TRADE Financial Corp (NASDAQ:ETFC) and Bank of America Corp (NYSE:BAC) are down by 5% and 3.4% respectively due to the weak non-farm payroll report. Because the payroll number came in significantly below expectations, investors now don’t know if the Federal Reserve will raise interest rates this month during its FOMC meeting. If the Federal Reserve remains accommodative and interest rates remain low, E*TRADE Financial Corp (NASDAQ:ETFC) and Bank of America Corp (NYSE:BAC) won’t make as much in interest related income and their earnings per share won’t be as strong as many bulls expected. In the intermediate to long term, however, many investors believe the Federal Reserve will eventually raise rates and both stocks will benefit from wider net interest margins. Of the 766 elite funds in Insider Monkey’s database, 39 were long E*TRADE and 110 were bullish on Bank of America at the end of March.
On the next page, we examine Immunomedics, Gogo, and Globalstar.
Immunomedics Declines After Not Presenting at ASCO
Immunomedics, Inc. (NASDAQ:IMMU) is 15% lower today after the company was removed from the ASCO Cancer Conference. Immunomedics, Inc. (NASDAQ:IMMU) was apparently trying to present data on IMMU-132, its refractory/relapsed metastatic triple-negative breast cancer treatment candidate, that was previously presented elsewhere, and that’s against the conference’s rules. Although Immunomedics is trying to reverse the ASCO decision, the company doesn’t have much time to convince the decision makers before the point is moot. The conference starts today and runs to the 7th. Nine elite funds owned slightly over 11% of the company at the end of the first quarter.
Gogo Declines on Lost Orders
Gogo Inc (NASDAQ:GOGO) shares have retreated by more than 14% after American Airlines Group Inc (NASDAQ:AAL) split an in-flight, satellite internet service order between Gogo and its rival, ViaSat. Investors were hoping that Gogo Inc (NASDAQ:GOGO) would get more of the order rather than just part of it. American Airlines will use Gogo for around 140 planes and for ground-based ATG connectivity while it will use ViaSat for around 100 planes. The number of savvy fund holders with holdings in Gogo fell by three quarter-over-quarter to 16 as of the most recent 13-F reporting period.
Globalstar Tumbles on Speculation of FCC No-Vote
Globalstar, Inc. (NYSEMKT:GSAT) is 60% in the red on rumors that Jessica Rosenworcel, an FCC Commission member, will vote ‘No’ along with fellow member Ajit Pai on Globalstar’s potential use of unlicensed spectrum for a Wi-Fi service. Seeing as there are five members that can vote concerning the matter, Globalstar’s Wi-Fi hopes might run into serious trouble if fellow member Michael O’Rielly gives the proposal a thumbs down. Of the around 766 elite funds we track, 15 funds owned $163.74 million of Globalstar, Inc. (NYSEMKT:GSAT) and accounted for 10.70% of the float on March 31, versus 13 funds and $149.07 million respectively on December 31.