Here’s Why These 5 Stocks Are Deep in the Red Today

Although crude futures have rallied to almost break-even and most of the major earnings reports released so far aren’t sharply negative in terms of those company’s macro-economic guidance, shares of Transenterix Inc (NYSEMKT:TRXC), Sarepta Therapeutics Inc (NASDAQ:SRPT), Ericsson (ADR) (NASDAQ:ERIC), Independence Contract Drilling Inc (NYSE:ICD), and Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) are significantly lower today. Let’s find out why traders are selling off these stocks and analyze relevant hedge fund sentiment towards each of them.

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Transenterix Sharply Lower on Response from the FDA

Transenterix Inc (NYSEMKT:TRXC) shares have more than halved after the FDA notified it on April 19 that it had determined that the company’s SurgiBot System does not meet the criteria for substantial equivalence based on the information and data submitted to it in TransEnterix’s 510(k) submission. CEO Todd Pope discussed the FDA’s decision in a press release:

“The FDA’s decision is extremely disappointing. We are in the process of reviewing all aspects of the FDA’s communication. We will work to complete this review, and will provide an update on the regulatory strategy for the SurgiBot System together with our first quarter 2016 financial and operating results during our quarterly conference call on May 10, 2016.”

SurgiBot would allow surgeons to be in a sterile field when operating. The number of funds that we track which held shares of Transenterix Inc (NYSEMKT:TRXC) fell by three quarter-over-quarter to seven by the end of December.

Sarepta Down on Briefing Material Release

Sarepta Therapeutics Inc (NASDAQ:SRPT) is 46% lower in afternoon trading after the briefing doc over eteplirsen, the company’s Duchenne muscular dystrophy candidate, was published. For those scientifically inclined traders, the briefing document can be viewed at the FDA’s website. The doc highlights problems over the company’s Study 201/202 trial, which might render the study’s efficacy conclusion invalid. 17 top funds owned almost one-quarter of Sarepta Therapeutics Inc (NASDAQ:SRPT)’s float at the end of 2015.

On the next page we see what’s happening with Ericsson (ADR), Independence Contract Drilling Inc, and Natural Grocers by Vitamin Cottage Inc.

Traders Sell Ericsson on Earnings

Ericsson (ADR) (NASDAQ:ERIC) shares have fallen by over 14% after the company released soft first quarter earnings of SEK0.87 or $0.11 per share. Although net profit rose by 49% year-over-year, revenue declined by 2.4% and gross margin inched lower by 2.3%. As a response, the company is reorganizing itself into five business units and one dedicated customer group for Industry & Society. CEO Hans Vestberg explained the rational behind the restructuring in a press release:

“We are today announcing structural changes to further accelerate strategy execution and drive efficiency and growth even harder across the company. We will create a leaner, more fit for purpose, organization to cater to the needs of different customer segments and to faster capture market opportunities. As 5G, the Internet of Things and Cloud drive the next phase of industry development, the time is right to make this change.”

Of the 786 active funds that we track, six of them owned $139.79 million worth of Ericsson (ADR) (NASDAQ:ERIC)’s shares on December 31, down from 11 funds on September 30, but well up from the $48.51 million in holdings those 11 funds owned. 

Independence Contract Drilling Down on Stock Offering 

Independence Contract Drilling Inc (NYSE:ICD) is almost one-fifth lower today after the company announced that it has launched an underwritten offering of 11.5 million shares of common stock at $3.50 per share. Underwriters will have a 30-day option to buy an additional 1.725 million shares. The company intends to use the net proceeds of $37.3 million to repay some debt and for general corporate purposes. Five top funds that we track owned 5.5% of Independence Contract Drilling Inc (NYSE:ICD) as of the end of 2015.

Lower Outlook Leads Traders to Sell Natural Grocers

Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) is 29% in the red due to lower guidance. For the second quarter of fiscal year 2016 ended March 31, Natural Grocers now expects sales of $176.5 million-to-$178 million and earnings of $0.15-to-$0.16 per share, well beneath the $184.4 million in sales and $0.26 per share in earnings that analysts were expecting. In a press release, Natural Grocers Co-President Kemper Isely described the challenging environment that lead to the weaker results:

“We expect our second quarter sales results will reflect the evolving and competitive natural and organic food retailing environment. To a lesser extent, we anticipate second quarter sales will be impacted by economic pressures in several of the markets we serve due to continuing low oil and gas prices and internally generated competition as a result of our opening of new stores in existing markets. Further, adverse weather in Colorado affected the key Easter holiday selling period. In addition, we were unable to quickly adjust expense levels to the moderated sales trends, resulting in pressure on store-level margins.”

Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) was in the portfolios of five funds tracked by Insider Monkey as of December 31, down by two funds quarter-over-quarter.

Disclosure: None