Markets are mixed on Tuesday trading, even though May economic figures came in ahead of expectations, and oil and gold are trading up. However, major U.S. stock indexes all seem on track to closing the month up, marking the third consecutive month of gains. Among the stocks in the spotlight on Tuesday are StemCells Inc (NASDAQ:STEM), Coca-Cola Enterprises Inc (NYSE:CCE), Chemours Co (NYSE:CC), Hewlett Packard Enterprise Co (NYSE:HPE) and Fidelity & Guaranty Life (NYSE:FGL), all of which are posting losses in the afternoon hours. So, let’s take a look into the events driving these moves, and into what the hedge funds in our database think about the companies in question.
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 more details about our small-cap strategy).
StemCells Plummets On Study Termination
Let’s start with StemCells Inc (NASDAQ:STEM), whose stock is down by more than 80% on Tuesday afternoon, following the announcement of the termination of the company’s Phase II Pathway Study in spinal cord injury. The decision was prompted by the analysis of data from the study, which showed that, while StemCells’ proprietary cells treatment generated an improvement in patients, “the effect and the perceived trend of the effect over time did not justify continuing the study or exploring the variability in the initial patient observations, given the financial resources available to the Company,” a press release explained. Nano-cap StemCells Inc (NASDAQ:STEM) counted five hedge fund supporters -among the funds that we track- at the end of the first quarter of 2016. Among the largest shareholders was Nathan Fischel’s DAFNA Capital Management, which disclosed ownership of 699,563 shares of the company – which equated to 58,297 shares following the 1:12 reverse stock split implemented on May 9.
Coca-Cola European Partners Tumbles On Debut
Next up is Coca-Cola European Partners, formerly Coca-Cola Enterprises Inc (NYSE:CCE), and still trading under this name on the NYSE, whose stock has lost more than 24% since the opening bell, following the completion of the merger between three The Coca-Cola Co (NYSE:KO) bottlers – Coca-Cola Enterprises, Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetränke GmbH. The new, London-based bottler is now the largest independent bottler for Coca-Cola from a revenue perspective. A total of 30 funds among those we track were long the pre-merger Coca-Cola Enterprises Inc (NYSE:CCE) at the end of the fist quarter – it should be noted, however, that the merger was agreed upon in October of 2015. Their stakes accounted for more than 7% of the company’s shares outstanding; First Eagle Investment Management alone held more than 2% of the float, having declared ownership of 4.75 million shares, worth $241 million, as of the end of March.