A Look at Five Declining Stocks and the Developments Behind Their Moves

With major stock market indices mixed in the first hours of trading on Monday, five stocks are ahead of the crowd, losing a lot of ground on high trading volumes. The stocks in question are AK Steel Holding Corporation (NYSE:AKS), Kinder Morgan Inc (NYSE:KMI), Atmel Corporation (NASDAQ:ATML), Whole Foods Market, Inc. (NASDAQ:WFM), and Chesapeake Energy Corporation (NYSE:CHK). Let’s take a closer look at the developments that has caused these stocks to slump this morning and see if the hedge fund sentiment suggests that they might be good long-term bets.

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So let’s take a closer look at Monday’s top losers, starting with AK Steel Holding Corporation (NYSE:AKS), whose shares have slid by nearly 10%. The company is expected to report its third quarter financial results tomorrow, but the stock took a hit today after Bank of America downgraded it to ‘Underperform’ from ‘Neutral’ and cut its price target to just $1.00 from $4.00. Analysts currently have a consensus estimate of a loss of $0.08 per share on revenue of $1.70 billion for AK Steel Holding Corporation (NYSE:AKS)’s third quarter financial results. Among smart money investors we follow, the sentiment is also weak, with only 20 funds reporting long positions as of the end of June, although they held over 20% of the company’s shares in aggregate. Among them, Israel Englander’s Millennium Management added 3.21 million shares to its position in AK Steel Holding Corporation during the second quarter, having reported ownership of 7.53 million shares in its latest 13F filing.

Kinder Morgan Inc (NYSE:KMI)‘s stock has inched down by over 3% so far today. This morning, the company issued several filings with the Securities and Exchange Commission, outlining the launch of an underwritten public offering of 32.0 million depositary shares, plus 4.80 million as over-allotment options. Kinder Morgan plans to list these depositary shares on the New York Stock Exchange. The move represents one of Kinder Morgan’s attempts to raise more capital, as it struggles in the environment of low crude prices.

Last week, Kinder Morgan reported its financial results for the third quarter and increased its dividend to $0.51 from $0.49, which gives its stock a dividend yield of 7.24%. Smart money likes Kinder Morgan for that high dividend yield and the company is rather popular among the funds we track, as a total of 64 investors reported long stakes in the stock as of the end of June. In the current round of 13F filings, Bernard Selz‘s Selz Capital reported ownership of 808,211 shares of Kinder Morgan Inc (NYSE:KMI), held as of the end of September.

Shares of Atmel Corporation (NASDAQ:ATML) lost over 9% in the first hours of trading, two days before the company is scheduled to report its financial results for the previous quarter. Analysts currently expect Atmel to report earnings per share of $0.08 on revenue of $292.95 million, which would be a 22% sales drop from a year ago. As the semiconductor industry is struggling with declining PC sales and going through a wave of consolidations, investors are probably dumping Atmel on fears that it won’t be able to meet the estimates. Among the funds from our database, 36 investors held shares of Atmel Corporation (NASDAQ:ATML) at the end of June, up by eight over the quarter, while the aggregate value of their stakes represented around 9% of the company’s shares. Mario Gabelli‘s GAMCO Investors initiated a stake of 72,500 shares in Atmel Corporation (NASDAQ:ATML) during the third quarter (Gabelli also added Atmel to the equity portfolios of Gabelli Funds and Gabelli Securities).

Whole Foods Market, Inc. (NASDAQ:WFM) is trading around 4% in the red today, extending the losses of the last several days as investors become more and more concerned that the company’s sales are slowing down amid increased competition from larger retailers like Wal-Mart Stores, Inc. (NYSE:WMT). On the back of these concerns, Cleveland Research has downgraded Whole Foods’ stock to ‘Underperform’ from ‘Neutral’ today, after Oppenheimer and Wedbush each lowered their price targets on the stock last week, to $40.00 and $38.00, respectively. Among the funds from our database, only 36 held stakes in Whole Foods Market, Inc. (NASDAQ:WFM) at the end of June, while in the current round of 13F filings, for the third quarter reporting period, Sanford J. Colen’s Apex Capital reported a new stake in Whole Foods, containing 625,300 shares.

Finally, Chesapeake Energy Corporation (NYSE:CHK)‘s stock has declined by over 5%, a day after Morningstar downgraded its credit rating to ‘B+’ from ‘BB+’ signaling a high level of default risk. The company’s stock has been following the declining trend of oil prices and is down by over 60% year-to-date. Among the funds from our database, the sentiment towards Chesapeake Energy Corporation (NYSE:CHK) is somewhat cautious, since the number of funds with long positions declined by four to 33 during the second quarter, while the aggregate value of their stakes was equal to 23.40% of the company’s market cap at the end of June.

Disclosure: None