Crude is up by more than 3% today and the stock markets are accompanying its surge, with all major U.S indexes up by more than 0.5%. However, a few stocks are moving in the opposite direction. This is the case for Genie Energy Ltd (NYSE:GNE), T2 Biosystems Inc (NASDAQ:TTOO), Fortinet Inc (NASDAQ:FTNT), Lannett Company, Inc. (NYSE:LCI), and LendingClub Corp (NYSE:LC). Let’s take a look into the events that are dragging these stocks lower, and see if hedge fund sentiment indicates that this could be a good buying opportunity or not.
Our research 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).
Genie Energy’s Hydrocarbon Site Disappoints
Let’s start with Genie Energy Ltd (NYSE:GNE), which is down by more than 6% in Tuesday trading, even though the company announced this morning that it had received an extension of its license from the Israeli Ministry of Energy and Water, to continue to conduct its multi-well oil and gas exploration program through April 9, 2017. So, what is driving the stock down? Well, in the SEC filing where the company disclosed said extension, it also declared that it had not encountered the levels of liquid hydrocarbons it originally expected, and consequently, “could not confirm the current commercial viability of the resource.”
Among the funds that we track, six were long Genie Energy Ltd (NYSE:GNE) at the end of the fourth quarter of 2015. The largest stake was that held by Steve Tannenbaum’s Greenwood Investments; the position comprised 539,731 shares and was worth more than $6 million on December 31.
T2 Biosystems Guidance Falls Short of Consensus
Next up is T2 Biosystems Inc (NASDAQ:TTOO), which is trading down by more than 11.75% this afternoon, driven by the announcement of the company’s preliminary first quarter financial results. After the close yesterday, the micro-cap in vitro diagnostics company said that it expects first quarter revenue of $1 million. While that figure implies a 455.6% year-over-year increase in revenue, it still falls short of consensus estimates, which stand at $1.47 million. Moreover, the company’s management said that due to a slow start in 2016, it had lowered its T2Candida commitment goal to 45-to-65 accounts globally, down from 90 accounts globally.
T2 Biosystems Inc (NASDAQ:TTOO) counts plenty of hedge fund support. At the end of the fourth quarter, 11 funds among those that we track held more than 28% of the company’s float. One of the largest shareholders of record was Dennis Purcell’s Aisling Capital, which disclosed ownership of 2.83 million shares of the company as of December 31.
We’ll look into the weakness witnessed in three other stocks today on the following page.
Juniper Drags Fortinet Down
Shares of Fortinet Inc (NASDAQ:FTNT) are trading down by almost 4% in the afternoon hours, most likely as a reaction to Juniper Networks, Inc. (NYSE:JNPR)’s preliminary first quarter results, which were released on Monday evening. The company said that it expects to earn $0.35-to-$0.37 per share on revenue of $1.09 billion-to-$1.10 billion, down from previous EPS guidance of $0.42-to-$0.46, and revenue expectations of $1.15 billion-to-$1.19 billion. Consensus estimates stood at the upper range of the previous guidance, coming in at $0.45 per share in EPS and $1.18 billion in revenue.
Several funds in our database are taking a hit from this decline. 25 funds among those that we track were long Fortinet Inc (NASDAQ:FTNT) at the end of the fourth quarter. Among them was Ken Griffin’s Citadel Investment Group, which held the largest position, comprised of 1.82 million shares.
Bogda’s Departure Has Investors Worried
Another decliner in Tuesday trading is Lannett Company, Inc. (NYSE:LCI), which has lost 5.75% since the bell rang this morning. The decline was triggered by the announcement that president Michael J. Bogda will be leaving the company, effective June 3, “to pursue other interests.”
Lannett Company, Inc. (NYSE:LCI) saw a marked reduction in hedge fund support over October-to-December period, as the number of hedge funds in our database long the stock fell by 41% to 17. However, Mitchell Blutt’s Consonance Capital Management seemed quite bullish. The firm initiated a stake in the company comprising 1.31 million shares during the quarter, giving it the largest position among those investors as of December 31.
LendingClub Still A ‘Show Me’ Story
Finally, there’s LendingClub Corp (NYSE:LC), which is down by almost 4.5% this afternoon, potentially in reaction to this week’s LendIt conference, an annual event that brings together emerging technology-powered financial institutions. LendingClub’s performance has been quite poor for some time. Over the last year, the stock has lost almost 60%, while since its IPO back in December of 2014, its shares have fallen by more than 70%. Investors are demanding that the company prove that “the model works through different economic cycles,” LendingClub CEO Renaud Laplanche explained. “There’s some skepticism of the staying power of the model,” he added. “For now, investors are valuing these businesses more like traditional lenders than high-growth tech companies,” a CNBC article expounded.
Despite the public’s bearishness, LendingClub Corp (NYSE:LC) saw hedge fund support rise during the fourth quarter, with the number of hedge funds in our database long the stock increasing by 20%, to 18. A noteworthy position was held by Valinor Management LLC, headed by David Gallo, which owned 14.39 million shares of LendingClub worth almost $160 million on December 31.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned in this article.