Here Is Why These Four Stocks Are Sliding Today

U.S. stocks took a nosedive today, amid mixed economic data and falling oil prices. The energy sector is the biggest laggard, as the Down Jones Industrial Average plunged by as much as 250 points during the first hours of trading. In this article we’ll take a look at some of the stocks that are among the top losers: Micron Technology, Inc. (NASDAQ:MU), JetBlue Airways Corporation (NASDAQ:JBLU), Alcoa Inc (NYSE:AA), and Nordson Corporation (NASDAQ:NDSN). Aside from the news that drove these stocks lower, we are also going to assess what the funds we follow think about these companies.

We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 53 percentage points (102% return vs. S&P 500’s 48.7% gain) over the last 38 months (see the details here).

Semiconductor stocks are taking a battering today as well and Micron Technology, Inc. (NASDAQ:MU) is hurting the most. The stock is down by roughly 3% as investors are adjusting to the possibility that the company’s next financial report could miss estimates. The avalanche started on Tuesday, after Susquehanna Financial’s Mehdi Hosseini said that falling prices of Micron’s DRAM chips could have a major impact on its bottom line. Despite having a positive outlook for Micron, Hosseini believes fiscal first quarter results will most likely come in at the lower end of the company’s projections, which are below market expectations. The company said it expects revenues of $3.35 billion to $3.6 billion and a profit between $0.20 and $0.26 per share. Analysts are looking for $3.48 billion in revenues and earnings of $0.23 per share.

Although it is still among the hedge funds’ favorite stocks, Micron Technology, Inc. (NASDAQ:MU) has lost some of its appeal during the third quarter, with the number of hedge fund long positions decreasing to 71 at the end of September from 79 a quarter earlier. In its latest 13F filing, David E. Shaw’s D E Shaw reported a 38% increase in its holding of Micron stock to 12.4 million shares valued at $186 million. David Einhorn, on the other hand, chose to reduce his exposure to the stock and has dumped nearly 70% of his holding during the quarter. Greenlight Capital reportedly held 12.3 million shares worth $185 million at the end of September.

Shareholders of JetBlue Airways Corporation (NASDAQ:JBLU) were not overjoyed by the company’s traffic results for November, a key revenue metric, which sent shares tumbling by as much as 5% during the first hour of trading today. The company said it expects passenger revenue per available seat mile to fall by 2% to 3% year-over-year for the 2015 fiscal fourth quarter. JetBlue said this is partly because there were fewer cancellations and higher capacity due to favorable weather and better operations performance. Shares are currently trading around the $24.50 level and are up by approximately 51% year-to-date.

David Tepper‘s Appaloosa Management LP was the largest holder of JetBlue Airways Corporation (NASDAQ:JBLU) stock at the end of the quarter among the funds we follow. In its latest 13F filing, Appaloosa reported a 10% decrease in its stake to 4.49 million shares valued at $115 million. According to our database, 42 funds reported ownership of JetBlue shares at the end of the third quarter, down from 50 at the end of June. 

Alcoa Inc (NYSE:AA) stock is taking a hit after the latest economic data from China show further signs of a growth slowdown. In November, imports fell by 8.7% year-over-year, while exports tumbled by 6.8%, pointing to a decrease in demand. The statistics for the aluminium industry dealt another blow to Alcoa, as Chinese aluminium companies reportedly exported 450,000 metric tons of unwrought aluminum, up by 15% year-over-year. This was a surprise as Chinese exports of aluminium have been decreasing for four consecutive months prior to November. Alcoa shares have tanked by as much as 4.5% during the first hours of trading today.

At the end of September, 12.6% of Alcoa Inc (NYSE:AA)’s common stock was held by 46 funds from our database, up from 45 at the end of the second quarter. Value investor Seth Klarman made a big play for Alcoa during the third quarter, initiating a huge position that amasses 52.3 million shares worth $505 million according to Baupost Group’s latest quarterly report. Robert Rodriguez and Steven Romick are also betting big on this stock, having upped their stake by 37% to 47.6 million shares valued at $460 million.

Fiscal fourth quarter financial results have sent Nordson Corporation (NASDAQ:NDSN) shares tumbling as well this morning, as the company missed both revenues and earnings expectations. Nordson reported $446.2 million in revenues, missing Wall Street’s estimates of $449.9 million, and earnings of $0.95 per share when adjusted for restructuring costs, below analysts’ consensus of $1.08 per share. During the first hour of trading, the stock fell as much as 8.3% before regaining some of the lost ground.

Hedge fund sentiment towards Nordson Corporation (NASDAQ:NDSN) significantly improved during the third quarter, as the number of hedge fund long positions increased to 17 from 10. Chuck Royce did not follow the main trend; he chose to reduce his exposure to the stock. In its latest 13F filing, Royce & Associates reported ownership of 477,696 shares worth $30.1 million.

Disclosure: none.