What Is Going On With These 4 Plunging Stocks?

On the second day of the trading week, Eldorado Gold Corp (USA) (NYSE:EGO), Natural Health Trends Corp. (NASDAQ:NHTC), HeartWare International Inc (NASDAQ:HTWR), and GameStop Corp. (NYSE:GME) are each deep in the red as investors sell their shares at ever declining prices, for various reasons. Let’s take a closer look at why investors are fleeing and also analyze what the world’s greatest investors think of each stock.

We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.

Eldorado Gold Corp (USA) (NYSE:EGO) shares have fallen by 19% today on the news that the company is halting development in many of its Greek mines due to that country’s government not issuing the necessary permits in a timely matter. CEO Paul N. Wright commented:

“Eldorado Gold has been, and remains, a committed, responsible and patient partner to the Greek government and to the people of the communities in which we operate. The projects have considerable potential with demonstrated economic and social benefits. At this time, we would instead prefer to be creating additional employment in Greece and advancing the construction and development of our Skouries and Olympias Projects in Halkidiki, as well as our assets in Thrace. However, we have a duty to all our stakeholders and the significant time and process risks created by Greece’s Ministry of Energy and Environment have left us with no choice but to reduce activities and personnel.”

Eldorado Gold Corp (USA) (NYSE:EGO) has sought the permits for over a year to no avail. Analysts estimate that Eldorado Gold’s Greek assets make up around 40% of the company’s net asset value. Cliff Asness‘ AQR Capital Management was among the 14 elite funds that held shares of Eldorado as of September 30.

Natural Health Trends Corp. (NASDAQ:NHTC), a direct-selling and e-commerce company that markets premium quality personal care and other wellness products under the NHT Global brand, has fallen by 14% today as the stock remains under selling pressure. On January 7, an online writer posted an article alleging that the Chinese government is investigating the company, although as of January 11, Natural Health Trends has claimed that it is unaware of any such investigation. Traders could also be selling Natural Health Trends Corp. (NASDAQ:NHTC) because the company has substantial Chinese exposure and China’s stock market is a roller-coaster right now. Natural Health Trends also announced yesterday that it expects fourth-quarter revenue of $73.6 million. From our data we see that 13 elite funds owned 9.4% of the company’s float at the end of the third quarter. That was up from nine elite funds that held the company’s shares at the end of the prior quarter.

On the next page, we examine what’s happening with HeartWare International Inc and GameStop Corp.
HeartWare International Inc (NASDAQ:HTWR) is off by almost one-third in trading today after the company issued a press release stating that its preliminary revenue for the fourth quarter was approximately $68 million and that it might have to continue delaying regulatory filings for its next-generation ventricular assist device, MVAD, due to the need to optimize its current process. In evaluating the MVAD System, HeartWare International Inc (NASDAQ:HTWR) said the following:

“The company has detected certain software algorithms, which appear to increase the potential for pump thrombus. In parallel, the company is evaluating various aspects of the system design to determine whether additional changes could be made to improve performance. Should design changes be identified that could enhance outcomes, initiation of a new trial would likely be required. The company expects that these efforts may take several months to complete, and the timetable for regulatory filings and restarting clinical implants cannot be precisely projected at this time.”

21 elite funds in our database held 23.9% of HeartWare shares as of September 30.

In other news, GameStop Corp. (NYSE:GME) shares are off by 5.5% due to a disappointing guidance update from the video game and hobby retailer. Because of slower-than-expected holiday sales, GameStop lowered the top end of its fourth quarter EPS estimate to $2.25 from the previous $2.32. The company did however raise the low end of its EPS guidance to $2.19 from the previous $2.12. Total global sales for the company during the holiday period inched up by 1.8% year-over-year to $2.99 billion, while comparable store sales rose by 4.4% during the same time period. The number of smart money funds long GameStop Corp. (NYSE:GME) rose by five to 31 during the latest 13F reporting period.

Disclosure: None