Why Are Traders Selling Off These 5 Stocks Today?

Although the broader indexes are flat and crude futures have now recovered some of their earlier losses, shares of Trueblue Inc (NYSE:TBI), Lithia Motors Inc (NYSE:LAD), Mellanox Technologies, Ltd. (NASDAQ:MLNX), Intrexon Corp (NYSE:XON), and Werner Enterprises, Inc. (NASDAQ:WERN) are deep in the red today for various reasons. In this article we will analyze why traders are selling each stock and also see how the smart money is positioned in the five stocks.

At Insider Monkey, we track around 785 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).

Trueblue Inc (NYSE:TBI)‘s stock is being battered today after its latest earnings report was released yesterday evening. Although the company beat earnings estimates by a penny per share with EPS of $0.26, TrueBlue missed top-line estimates by $19.87 million with sales of $645.98 million. Adjusted EBITDA rose by just 9% year-over-year to $21 million. CEO Steve Cooper discussed the results in the press release:

“Our revenue growth slowed throughout the quarter, resulting in less overall revenue than expected. The current environment, which combines slowing demand with rising labor and sourcing costs, has created some sensitivity in pricing. That makes it more difficult to pass these higher costs along to customers.”

2016 full-year guidance was mixed, with the company expecting revenue of $2.8 billion-to-$2.9 billion, adjusted EBITDA of $158 million-to-$172 million, and adjusted net income of $2.10-to-$2.35 per share. Cliff Asness‘ AQR Capital Management was among 14 elite funds that we track which held shares of Trueblue Inc (NYSE:TBI) at the end of 2015. Shares of the company have retreated by 25% in today’s trading session.

Lithia Motors Inc (NYSE:LAD) narrowly beat both top and bottom-line expectations with first quarter EPS of $1.55 on revenue of $1.98 billion announced today. Same-store sales rose by 8% year-over-year while gross margin inched up 20 basis points to 15.5%. Guidance for the full 2016 year came in at revenue of $8.5 billion-to-$8.6 billion, diluted EPS of $7.30-to-$7.50, and a tax rate of 39.5%, while for the second quarter, the company guided for diluted EPS of $1.86-to-$1.90. Despite the healthy numbers, traders were expecting more apparently, as Lithia Motors Inc (NYSE:LAD) shares are down by 12% today. Larry Robbins‘ Glenview Capital was among 25 hedge funds in our system that held shares of the company as of December 31.

 On the next page, we examine why shares of Mellanox Technologies Ltd, Intrexon Corp, and Werner Enterprises Inc. are also trading down today.

Mellanox Technologies, Ltd. (NASDAQ:MLNX) is down by 12.8% despite the company also beating earnings and revenue estimates put forth by analysts. For the first quarter, Mellanox Technologies, Ltd. (NASDAQ:MLNX) earned $0.81 per share on revenue of $196.8 million (up by 34.2% year-over-year), while estimates had called for EPS of $0.76 and revenue of $191.3 million. Although it reported great first quarter results, the company’s guidance could be the reason for today’s decline. Mellanox expects second quarter sales of $210 million-to-$215 million versus estimates of $216.2 million. The company also expects non-GAAP gross margin of 71%-to-72% and an increase in non-GAAP operating expenses of 8%-to-10% year-over-year. Jim Simons‘ Renaissance Technologies owned 935,583 Mellanox shares at the end of the fourth quarter.

Intrexon Corp (NYSE:XON) is off by 21% today after Spotlight Research (formerly Forensic Research Analyst) questioned whether the company’s 100% rally over the past three months, which was kickstarted due to the buzz around the company’s genetically modified mosquitoes product to combat the Zika virus, had gone too far. Among other things, the article brought into question the track record of the company, stating that:

“Intrexon has been around for more than 17 years and commercialized effectively zero meaningful commercial products using its own technology. The company’s technology is a “secret”. Nobody can explain exactly what it does. Not its employees, not sell-side analysts and not the people who own the stock.”

Some smart money funds appear to disagree, however, as 19 elite funds that we track in our database owned 7.4% of Intrexon Corp (NYSE:XON)’s float at the end of 2015.

Werner Misses; Traders Sell

Werner Enterprises, Inc. (NASDAQ:WERN) shares have fallen by 8.29% after the company reported a disappointing first quarter. For the period, Werner earned $0.28 on sales of $482.8 million, missing estimates by $0.04 per share and $11.3 million respectively. Average revenue per track per week, net of fuel surcharge, inched down by 2.4% year-over-year. The tight market remains a challenge for the company, as driver recruitment difficulty persists. 14 funds owned $178.17 million of Werner Enterprises, Inc. (NASDAQ:WERN)’s shares amounting to 10.60% of the float on December 31.

Disclosure: None