After a relatively positive end to last week, the markets are back to tumbling today, with all major U.S stock indexes down by more than 0.5%. Among the stocks driving these declines, we can count Potash Corporation of Saskatchewan (USA) (NYSE:POT), Twitter Inc (NYSE:TWTR), Oncomed Pharmaceuticals Inc (NASDAQ:OMED), Caterpillar Inc. (NYSE:CAT) and Diamond Resorts International Inc (NYSE:DRII). Let’s take a look into the events behind these drops, and into what the funds in our database think about the companies involved.
We determine hedge fund sentiment by analyzing the equity portfolios of some of the best-performing hedge funds and institutional investors. Through extensive research, we have determined that the due diligence that these investors employ, as well as their long-term focus makes them perfect targets to emulate. However, the results of our analysis have also showed that the small-cap picks of these funds can generate much better returns, with the 15 most popular small-cap stocks beating the market by an average of 95 basis points per month (read more details here).
Back to Monday’s movers, we’ve got Potash Corporation of Saskatchewan (USA) (NYSE:POT), down by over 6% in the early afternoon hours. The decline is the result of analysts at JP Morgan downgrading the stock to ‘Neutral’ from ‘Overweight’. Since the start of the year, shares of Potash have lost over 12% of their value as the market weakness continues, leading the company to close some of its mines.
However, it seems like hedge funds in our database are bullish on the company’s long-term prospects. For instance, over the third quarter of 2015, Jim Simons’ Renaissance Technologies boosted its holding of Potash Corporation of Saskatchewan (USA) (NYSE:POT) by 591%. The fund disclosed ownership of 5.12 million shares, worth more than $105 million as of September 30.
Next up is Twitter Inc (NYSE:TWTR), which is trading down about 2.9% and close to its all-time low. The decay was triggered by the news that four executives were leaving the company. According to CEO Jack Dorsey, Alex Roetter, senior vice president of engineering, Brian “Skip” Schipper, vice president of human resources, Katie Stanton, vice president of global media, and Kevin Weil, senior vice president of product, have all chosen to resign from their duties at the social media giant. The departures also prompted a downgrade from Stifel Nicolaus, which demoted the stock to ‘Hold’ from ‘Buy’ today in the wake of the executive upheaval.
It is not only research firms that are becoming less excited about Twitter Inc (NYSE:TWTR). During the third quarter, the number of hedge funds in our database long the stock fell by 42.5% to 27. For instance, Andor Capital Management, the fund founded by Daniel Benton and Christopher James, sold all of its 1.5 million Twitter shares over the period.
On the next page we will take a look at the news driving the declines in Oncomed Pharmaceuticals Inc (NASDAQ:OMED), Caterpillar Inc. (NYSE:CAT), and Diamond Resorts International Inc (NYSE:DRII).