Be Wary of These Five Tanking Stocks Today, Office Depot Among Them

Although all three indexes are well in the green and the Dow Jones is above 18,000 with this quarter’s earnings season being relatively quiet and the results less dire than had been predicted, the shares of five stocks are taking a beating today. Owens & Minor, Inc. (NYSE:OMI), Repros Therapeutics Inc (NASDAQ:RPRX), PTC Therapeutics, Inc. (NASDAQ:PTCT), Office Depot Inc (NASDAQ:ODP), and Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) are all shedding market cap at an inflated rate today. Let’s find out why traders are selling these stocks and see how hedge funds are positioned in each of them.

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Owens & Minor Loses a Big Account

Traders have sold Owens & Minor, Inc. (NYSE:OMI) off to the tune of 9% after the company announced that one of its major customers will not renew a distribution agreement with it. The customer is a national healthcare-provider and generated $525 million in revenue for Owens & Minor in 2015. The transitioning out of the customer will begin in late 2016. Although Owens & Minor affirmed its financial outlook for 2016, consisting of adjusted earnings of $2.00-to-$2.05 per share, the impact of the transition will have a large impact in 2017, barring any major intervening moves. 14 savvy funds that we track owned 6.3% of Owens & Minor, Inc. (NYSE:OMI) at the end of December.

Technical Selling Detected at Repros

Repros Therapeutics Inc (NASDAQ:RPRX) is off by 8.6% on no fundamental news. Shares of the company have surged substantially since the middle of April and some of today’s selling could be due to profit-taking. The nano-cap surged in mid-April due to the announcement of successful data from a Phase 2b trial of the company’s lead drug candidate Proellex, which showed the ability to lower menstrual bleeding in women with uterine fibroids. Repros Therapeutics Inc (NASDAQ:RPRX) shares are also moving closer to their 200 day simple moving average, which might offer some resistance. Ten funds in our database of 786 elite investors owned slightly over 12% of the company’s float at the end of 2015.

On the next page we examine why PTC Therapeutics Inc, Office Depot Inc, and Ironwood Pharmaceuticals Inc. are also among the day’s big losers.

Profit Taking at PTC Therapeutics

PTC Therapeutics, Inc. (NASDAQ:PTCT) is a victim of short-term profit taking today, as its stock is 8.5% lower on no fundamental news. Shares of the biotech surged 42% on April 15 when UK’s National Institute for Health and Care Excellence recommended the company’s lead drug candidate, Translarna, for certain types of nonsense mutation Duchenne muscular dystrophy. The FDA on the other hand stated that the company’s application of Translarna wasn’t complete enough for a substantive review in February. The number of smart money funds with holdings in PTC Therapeutics, Inc. (NASDAQ:PTCT) fell by half during the fourth quarter, to 14 by the end of December.

Office Depot Shares Down on Uncertainty

Office Depot Inc (NASDAQ:ODP) shares have retreated by 5% as the FTC’s case against the company’s potential merger with Staples, Inc. (NASDAQ:SPLS) nears its conclusion. The FTC is adamantly against the merger, as the agency believes the combination of the two companies will hurt consumers in the enterprise supply market. Proponents of the merger have argued that rising competition from e-commerce companies such as Amazon.com, Inc. (NASDAQ:AMZN) will render the FTC’s concerns invalid. Closing arguments in the FTC’s antitrust challenge to the merger have apparently been heard and a decision whether to issue a preliminary injunction to block the merger will soon be made. Paul Singer‘s Elliott Management owned more than 13 million shares of Office Depot Inc (NASDAQ:ODP) at the end of December, up by almost 50% from the end of September.

Technical Traders Selling Ironwood

Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) shares are 4.5% lower today on technical selling. Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD)’s stock recently pierced through some key moving averages and has lost a lot of its medium-term momentum. Not helping matters is the fact that the iShares NASDAQ Biotechnology Index is down on the day. Of the 786 active funds we track, 20 of them owned $308.64 million of Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD)’s shares, accounting for 18.60% of the float on December 31, up from 17 funds with $261.69 million in shares on September 30.

Disclosure: None