Why Pure Storage, Davita, Ensco and 2 Other Stocks are Falling Hard Today

The markets are poised to end an otherwise bullish week in the red today, as traders ruminate over the possible timing of a rate hike from the Federal Reserve, after failing to find a clue in the latest minutes from the central bank’s July meeting. San Francisco Fed President John Williams, however, was frank on Thursday, when he said he’d like to see the bank increase the rates “sooner rather than later.”

Among the stocks that are dipping big time today are Pure Storage Inc (NYSE:PSTG), DaVita HealthCare Partners Inc (NYSE:DVA), AK Steel Holding Corporation (NYSE:AKS), ENSCO PLC (NYSE:ESV), and First Majestic Silver Corp (NYSE:AG). Let’s find out why these stocks are losing value today and see how the hedge funds tracked by Insider Monkey are positioned in them.

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

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Pure Storage Downgraded By OTR Global

Pure Storage Inc (NYSE:PSTG) has lost over 16% of its value today after the California-based data storage company was downgraded to ‘Negative’ from ‘Mixed’ by OTR Global. OTR Global cited pricing pressure and weaker than expected pipelines for the third quarter in its survey results as the reasons for the downgrade. Pure Storage Inc (NYSE:PSTG) will announce its second quarter results on August 25, with analysts expecting the company to report a loss of $0.23 per share and $155.14 million in revenue. Pure Storage shares are now down by 30% since the company’s IPO last October.

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DaVita HealthCare Sliding After Obamacare Probe

DaVita HealthCare Partners Inc (NYSE:DVA)’s stock has lost over 5% so far today. The Denver-based dialysis services company is one of several such companies feeling the pain today after an investigation was launched by Federal officials concerning the rising number of dialysis claims made through Affordable Care Act plans during the second quarter, as some service providers are thought to be steering patients into Obamacare plans so as to collect higher fees. The Centers for Medicare and Medicaid Services announced that changes could be forthcoming to enrollment provisions and that penalties could also be enacted for dialysis firms caught abusing the system. Earlier this month, the company reported second quarter EPS of $1.01, surpassing the estimates of $0.98, while revenue of $3.72 billion was also better than the expected $3.67 billion. The stock is down by approximately 8% year-to-date. As of the end of the second quarter, Warren Buffett’s Berkshire Hathaway owns around 38.56 million shares of the company.

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We continue our discussion of today’s falling stocks on the next page.

AK Steel Downgraded by KeyBanc

AK Steel Holding Corporation (NYSE:AKS)’s stock has tanked by over 6% as the company was downgraded to ‘Underweight’ from ‘Sector Weight’ with a $4 price target by KeyBanc Capital Markets on Friday. Last month, the Ohio-based steel company reported second quarter net income of $17.3 million, compared with a $64 million loss for the same quarter of last year. Revenue of $1.49 billion fell short of estimates of $1.53 billion, mainly due to lower automotive contract pricing and lower shipments. Kenneth Tropin’s  Graham Capital Management owns about 16 million shares of the company as of the end of June.

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ENSCO’s Stock Falling Hard

ENSCO PLC (NYSE:ESV)’s stock has fallen by over 5% so far today after it reported the cancellation of a drilling contract yesterday. As the contract obligates the customer to pay it termination fees through next November, Ensco anticipates that it won’t materially affect the company’s results this year or next. Nonetheless, the cancellation is concerning to investors, as it could suggest broader weakness to come. Last month, the London-based drilling company reported second quarter EPS of $2.04 on $910 million in revenue, crushing analysts’ expectations of $1.51 in EPS on $746.55 million in revenue. Nonetheless, shares of ENSCO have been hammered so far in 2016, losing over 44%. Dmitry Balyasny’s Balyasny Asset Management owns around 7.5 million shares of the company as of the end of the June quarter.

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First Majestic Silver Losing Value After Silver Prices Drop

Last on our list of today’s losers is First Majestic Silver Corp (NYSE:AG), which is down by approximately 5% following a decline in silver prices as minutes from Federal Reserve’s July meeting hinted a rate hike in the near future. Silver prices suffer in the midst of rate hike concerns as investors look for assets that provide a yield. A strong dollar is also making silver a less attractive option for foreign investors. As of the end of the second quarter, Andrew Weiss’ Weiss Asset Management owned 5.25 million shares of the Canada-based mining company.

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Disclosure: None