Hedge Funds Are Still Crazy About These 5 Declining Stocks

#3 Williams Companies Inc (NYSE:WMB)

Investors with Long Positions (as of September 30): 73

Aggregate Value of Investors’ Holdings (as of September 30): $6.05 Billion

Williams Companies Inc (NYSE:WMB)’s stock slumped by nearly 35% during the third quarter and the number of funds that we track which owned it also came down by 13 during the same period. An even bigger decline was witnessed in the aggregate value of their collective Williams Companies holdings, which came down by over $4.5 billion during the July-to-September period. Shares have recovered slightly in the fourth quarter and trade down by 21% year-to-date. On October 28, Williams Companies reported its third quarter earnings, declaring EPS of $0.22 on revenue of $2.03 billion, which was better than the EPS of $0.15 on revenue of $2.02 billion that it reported for the same quarter of last year. Richard Perry‘s Perry Capital reduced its stake in the company by 13% to 8.35 million shares during the September quarter.

#2 Mylan NV (NASDAQ:MYL)

Investors with Long Positions (as of September 30): 74

Aggregate Value of Investors’ Holdings (as of September 30): $2.84 Billion

Mylan NV (NASDAQ:MYL) is an outlier in this list, as even though its stock crashed by over 40% during the third quarter, on a year-to-date basis its down by just 7.61%, thanks partly to its 21% rise in the fourth quarter. However, the decline in the third quarter did weigh on the stock’s popularity among hedge funds, as 18 fewer funds in our database held the stock by the end of the quarter, while the aggregate value of their holdings came down by $1.5 billion. On November 13, Mylan formally announced that it has lost its 7-month-old, $26 billion takeover bid for Irish drugmaker Perrigo Company plc (NYSE:PRGO). Three days after the announcement, Mylan announced that it will be buying back $1 billion worth of shares in an effort to appease investors. Phill Gross and Robert Atchinson‘s Adage Capital Management made a greater than eight-fold increase to its stake in Mylan NV (NASDAQ:MYL) during the third quarter, to 565,236 shares.

#1 Yahoo! Inc. (NASDAQ:YHOO)

Investors with Long Positions (as of September 30): 89

Aggregate Value of Investors’ Holdings (as of September 30): $5.47 Billion

Finally, erstwhile tech company Yahoo! Inc. (NASDAQ:YHOO) emerged as the most popular heavily-fallen stock among hedge funds at the end of September. During the third quarter Yahoo shares slumped by 26.4% and the number of funds that were long the stock also declined by 15. Nevertheless, the aggregate value of investors’ holdings in the company didn’t see a similar decline during that period, dipping by just 7.6%. Thus, the number of shares of the company held by hedge funds that we track actually increased during the July-to-September period, despite 15 fewer funds holding positions, as some of the remaining investors fortified their Yahoo holdings. Although Yahoo’s shares have recovered in the fourth quarter, they are still trading down by 30% year-to-date.

Earlier this week reports emerged that Yahoo! Inc.’s Board will have meetings throughout the week to discuss halting the spin-off of the company’s stake in Alibaba Group Holding Ltd (NYSE:BABA) in addition to mulling the possibility of selling the company’s core internet business. These suggestions were first made to Yahoo’s Board by activist investor Jeffrey Smith of Starboard Value LP, in a letter sent to the Board last month. Interestingly, Starboard Value LP more than doubled its stake in Yahoo! Inc. (NASDAQ:YHOO) to 7.1 million shares during the third quarter, before making those suggestions.

Disclosure: None