Hedge Funds Were Right to Ditch These Sinking Stocks, Part 2

#3 Williams Companies Inc (NYSE:WMB)

 – Number of Hedge Fund Holders (as of September 30): 73
– Total Value of Hedge Fund Holdings (as of September 30): $6.05 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 21.90%

Along with that of other midstream energy companies, shares of Williams Companies Inc (NYSE:WMB) fell substantially in the third quarter. Williams’ stock dropped 34.9% from June 30 to September 30, while the total number of elite funds long the stock fell from 86 to 73, and shares have dipped by another 28% in the fourth quarter. In late September, Energy Transfer Equity LP (NYSE:ETE) agreed to merge with Williams Companies Inc (NYSE:WMB) in a deal that is expected to yield $2 billion in annual EBITDA synergies by 2020. Under the terms of the merger, Williams Companies’ shareholders are entitled to 1.8716 Energy Transfer Equity LP (NYSE:ETE) shares for each share of Williams. Williams Companies’ shareholders can also elect to get cash, but on a prorated basis of $6.05 billion. Once the $6.05 billion of cash is paid out, Williams’ shareholders can only receive Energy Transfer Equity LP shares. Because the deal has a limited cash component, the deal is sinking in value because of ETE’s own declining shares. Stephen Mandel‘s Lone Pine Capital owned 17.68 million shares of Williams Companies at the end of the third quarter.

#2 Sunedison Inc (NYSE:SUNE)

 – Number of Hedge Fund Holders (as of September 30): 73
– Total Value of Hedge Fund Holdings (as of September 30): $1.06 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 46.80%

A net of 20 elite funds sold out of Sunedison Inc (NYSE:SUNE) in the third quarter, as shares of the beleaguered solar developer dropped by 76% during that time as liquidity concerns began to mount. Shares have continued to crumble in the fourth quarter, down by another 42%. Despite the flight of elite funds from the stock, SunEdison is still a hedge fund favorite, with 73 funds owning around 46.80% of the company’s float as of September 30. SunEdison and the solar industry could receive some good news in the near future if Congress extends favorable renewable energy policies in exchange for lifting the crude oil export ban. David Einhorn‘s Greenlight Capital owned 18.61 million shares of SunEdison at the end of September.

#1 Valeant Pharmaceuticals Intl Inc (NYSE:VRX)

 – Number of Hedge Fund Holders (as of September 30): 88
– Total Value of Hedge Fund Holdings (as of September 30): $17.73 billion
– Hedge Fund Holdings as Percent of Float (as of September 30): 29.10%

The number of elite funds long Valeant Pharmaceuticals Intl Inc (NYSE:VRX) fell to 88 from 98 quarter-over-quarter, as shares of the former high flier came crashing down to earth because of concerns over drug price regulation and later, over Valeant’s exact relationship with Philidor. Because of the concerns, shares of Valeant are now off by 34.97% year-to-date, including a 47% fall in the fourth quarter. To the company’s credit, Valeant shares have stabilized in recent weeks and Valeant uber-bull Bill Ackman‘s Pershing Square recently increased its stake to 9.9% of the company’s float, from the previous 5.7% held on September 30. If it doesn’t have any additional skeletons in its closet, Valeant should soon trade in the triple digits again.

Disclosure: None