Three Stocks Fall on Monday but Hedge Fund Data Suggests You Might Want to Buy Some of Them on the Drop

Shares of Verastem Inc (NASDAQ:VSTM), Huntsman Corporation (NYSE:HUN), and TrovaGene Inc (NASDAQ:TROV) are among the top losers today as the firms’ share prices have declined by 65%, 24%, and 8%, respectively. Verastem shares dropped on the back of news that the Phase 2 study of its VS-6063 drug was stopped. Meanwhile, Hunstman sank as a reaction to the firm’s announcement on Friday of headwinds expected to negatively impact the firm’s current quarter. The fall of TrovaGene’s stock, on the other hand, doesn’t seem to be related to any significant developments and comes in contradiction with the latest updates surrounding the company. Let’s take a closer look at each one of these three companies and see if the hedge fund sentiment suggest that their decline represents a good buying opportunity.

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Verastem Inc (NASDAQ:VSTM)’s shares are being punished today after the firm halted its mid-stage Phase 2 study on VS-6063, its lead treatment for mesothelioma cancer. According to the firm, a Data Safety Monitoring Board review revealed that there was no sufficient level of effectiveness for the treatment to continue enrolling patients for the study. Aside from the failure of VS-6063 for the treatment of mesothelioma cancer, the development casts doubt on the regimen’s prospects for the treatment of other types of cancer, such as lung and ovarian cancers which the treatment is also being tested to cure.

According to our data, the number of hedge funds long Verastem Inc (NASDAQ:VSTM) was unchanged at 13 by the end of the second quarter. There was a slight inflow of capital, however, as the total value of holdings of these funds decreased by 24.11% during the quarter to $30.74 million, amid a 25.86% decline of the stock. Hedge funds owned 11.20% of all Verastem shares at the end of June. The hedge fund with the largest stake in the firm was Kerr Neilson’s Platinum Asset Management with 1.73 million shares.

Turning to Huntsman Corporation (NYSE:HUN), the sharp decline of the company’s stock today is regarded as a reaction to the company’s announcement on Friday regarding to trends that it foresees negatively impacting its third quarter earnings. According to the organic chemical and inorganic chemical products maker, lower titanium dioxide selling prices, particularly in North America, continued year-on-year currency headwinds, and weak demand in the Asia Pacific region are expected to impact earnings for the current quarter. Moreover, the company said that lower oil prices which result in lower MTBE margins, lower MDI urethane component product margins in the Asia Pacific region, delayed lower raw material cost benefits, as well as the spending of $198 million in September to pay down debt, will also negatively affect the earnings. Fewer hedge funds followed by Insider Monkey were long Huntsman Corporation (NYSE:HUN) in the second quarter, with the number dropping by four to 38. Despite just a 0.45% drop of the stock during the period, the total value of holdings of hedge funds went down by 3.48% on the quarter to $938.72 million at the end of June. Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, owned the largest stake in Huntsman, containing 12.21 million shares.

In the case of TrovaGene Inc (NASDAQ:TROV), the decline of the stock today appears to be in contradiction with the news that surrounded the company last week (the stock is down by over 24% over the last five trading days). Maxim reiterated its ‘Buy’ rating and a price target of $13.00 last week, after the TrovaGene had said that its urine-based human papillomavirus (HPV) high-risk test is similarly capable of detecting high-risk HPV compared to traditional cervical cancer tests. It should be noted, nonetheless, that despite the declines, the stock has gained over 25% year-to-date. However, hedge funds appear to have been wary of TrovaGene Inc (NASDAQ:TROV) in the second quarter. The number of hedge funds with long positions increased by one to six during the quarter, but there was an outflow of capital. The stock gained over 49% in the second quarter, yet the total value of hedge fund holdings increased by only 37.96% to $38.59 million. Nonetheless, hedge funds owned 15.50% of TrovaGene at the end of June, pointing to a general overweight sentiment. Roberto Mignone’s Bridger Management owns 3.15 million TrovaGene shares by the end of the second quarter.

Disclosure: None