Why Are These Stocks in the Red Today?

After opening flat, the three indexes have sold off again. The Dow, S&P and NASDAQ are each off around 0.6%, while crude futures are down twice as much to hover just above $48 per barrel. Among the stocks also in the red are Infinity Pharmaceuticals Inc. (NASDAQ:INFI), Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC), NXP Semiconductors NV (NASDAQ:NXPI), Staples, Inc. (NASDAQ:SPLS), and Synchrony Financial (NYSE:SYF). Let’s find out why traders are selling and see how elite funds think of each stock.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).

Abbvie ABBV biopharmaceuticals cell blood dna gene stem test biotech research

RAJ CREATIONZS / shutterstock.com

Infinity Pharmaceuticals Falls on Study Results

Infinity Pharmaceuticals Inc. (NASDAQ:INFI) is 70% lower today after a Phase 2 trial showed that the company’s investigational molecule Duvelisib failed to impress despite meeting the primary endpoint of overall response rate. Because the drug did not yield a larger clinical benefit for patients with advanced indolent non-Hodgkin lymphoma, Infinity and AbbVie Inc (NYSE:ABBV) agreed to pause a Phase 1b/2 study evaluating duvelisib in combination with venetoclax. The company will seek feedback from the FDA on its next steps and is undertaking a strategic restructuring by closing down its discovery research organization which will impact 46 people. A total of 16 funds from our database were long Infinity Pharmaceuticals Inc. (NASDAQ:INFI) at the end of the first quarter, unchanged from the previous quarter.

Follow Infinity Pharmaceuticals Inc. (NASDAQ:INFI)

Ericsson Cuts Costs

Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) shares are off by 1.4% after the company announced it will lay off 3,000 to 4,000 of its workforce this summer. Given that much of latest generation networks have been built, the company has had a hard time growing its revenue. The sluggish growth has put pressure on management to cut costs. The company is also considering additional cost cutting measures too. The number of funds  tracked by Insider Monkey with holdings in Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) rose by seven to 13 during the first quarter of 2016.

Follow Ericsson L M Telephone Co (NASDAQ:ERIC)

On the next page, we examine NXP Semiconductors, Staples, and Synchrony Financial.

NXP Semiconductors Sells Unit

Shares of NXP Semiconductors NV (NASDAQ:NXPI) have inched down by around 1.6% despite the company having successfully sold off its Standard Products division for $2.75 billion to a Chinese consortium. Traders thought the unit would yield a minimum of $2 billion when NXP management put the division for sale earlier in the year. The transaction is expected to close in the first quarter of 2017. Among the funds tracked by us, 52 funds owned shares of NXP Semiconductors NV (NASDAQ:NXPI) as of the end of March.

Follow Nxp Semiconductors N.v. (NASDAQ:NXPI)

Staples Introduces ‘Staples Rush’

Not to be outdone by Amazon.com, Inc. (NASDAQ:AMZN), Staples, Inc. (NASDAQ:SPLS) is introducing its same-day delivery service called Staples Rush. The service will allow orders placed by 3:00 p.m. local time Monday – Friday on Staples.com to be delivered by 7 p.m. in eight major cities across the United States. Hopefully the same day delivery service will ramp up revenues and profits at the giant. Shares of the stock are down almost 2% today due to broader market weakness. Jim Simons’ Renaissance Technologies owned almost 9 million shares at the end of March.

Follow Staples Inc (NASDAQ:SPLS)

Synchrony Financial Loan Losses Larger Than Expected 

Synchrony Financial (NYSE:SYF) is around 12% in the red after the company disclosed that it expects a 20-30 basis point increase in net charge-off rates over the next 12 months. As a result, the company expects higher reserve builds and for its allowance coverage ratio to increase 20-30 basis points from the first quarter of 2016. The company also noted that its current loss rate in its portfolio is at historically low levels. The number of funds from our database with holdings in Synchrony Financial (NYSE:SYF) fell by 15 quarter-over-quarter to 67 at the end of March.

Follow Synchrony Financial (NYSE:SYF)

Disclosure: none