What Is Going On With These 5 Falling Stocks?

It’s a red day on Wall Street as all three major indexes are in the red today, along with crude oil. Weighing on sentiment is the news that Saudi Arabia will IPO its state giant, Saudi Aramco, which could be worth $2 trillion or more on the open market. Given that Saudi Arabia plans to float 5% of the company’s shares (or $100 billion at a $2 trillion valuation), some traders are selling now to front run other traders who might sell the S&P 500 and Dow to buy Saudi Aramco shares in the future. Among the stocks deeper in the red than the indexes today are GoPro Inc (NASDAQ:GPRO), TrovaGene Inc (NASDAQ:TROV), Knowles Corp (NYSE:KN), Community Health Systems (NYSE:CYH), and Gerdau SA (ADR) (NYSE:GGB). Let’s find out why investors are selling these stocks and see what top hedge funds think of each of them.

Our research determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details here).

GoPro Drops on Analyst Comments

GoPro Inc (NASDAQ:GPRO) shares are off by around 4% after analysts at Pacific Crest remained skeptical that GoPro’s recent acquisitions and new software will improve its business enough. The analysts lowered their fiscal year 2016 earnings estimate to a loss of $0.77 per share from a loss of $0.56 per share and also trimmed their fiscal year 2017 earnings estimate to a loss of $0.93 per share from a loss of $0.77 per share, citing weakness in GoPro’s supply chain. One bright note is the expected launch of GoPro’s first drone product, Karma, which should come onto the market around the end of the second quarter. The analysts believe GoPro will sell 5 million-to-6 million of those units globally in the first year. 18 out of the 786 elite funds that Insider Monkey tracks owned shares of GoPro Inc (NASDAQ:GPRO) at the end of December.

Downgrade Weighs on TrovaGene

TrovaGene Inc (NASDAQ:TROV) is more than one-fifth lower today after analysts at Piper Jaffray downgraded TrovaGene’s stock to ‘Neutral’ from ‘Overweight’. The analysts have a new price target of $5.26 on it, whereas they previously had an $8 per share price target. In other news, Trovagene has a new boss, as former Sequenom, Inc. (NASDAQ:SQNM) CEO Bill Welch was named CEO effective immediately. Mr. Welch replaces Dr. Antoium Schuh, who was fired in March due to a breach in fiduciary duty. TrovaGene Inc (NASDAQ:TROV) was in the portfolios of seven of the elite funds that Insider Monkey tracks at the end of the fourth quarter, up one from the end of the previous quarter.

On the next page we examine why Knowles Corp, Community Health Systems, and Gerdau SA (ADR) are all sinking today.

Knowles on the Move With Earnings on Deck

Knowles Corp (NYSE:KN) shares are 10% in the red due to traders selling the stock in anticipation of the company’s earnings report later today. According to Yahoo Finance, six analysts expect the company to report earnings per share of $0.03 on average, while the average of five analysts has Knowles Corp (NYSE:KN) pegged to report $179.62 million in sales. Although markets can be efficient, we’re not sure whether the selling this morning is indicative of the results set to be released later today. Legg Mason Capital Management, now a part of ClearBridge, was among 15 elite funds that we track that owned shares of Knowles at the end of 2015.

Community Health Systems Lower as COO Plans to Leave 

Community Health Systems (NYSE:CYH) shares have retreated by 9.5% on the news that its COO, David Miller, plans to retire at the end of the year. Miller was Community Health’s first COO and has served in the position since the beginning of 2014. Miller currently oversees the company’s six operating divisions. In other news, Community Health’s planned spin-off of Quorum Health is on track to be completed at the end of this week. 45 funds in our database owned $697.08 million worth of Community Health Systems (NYSE:CYH)’s shares, which accounted for 22.20% of the float on December 31. There were 59 funds with $1.17 billion in CHS holdings at the end of September.

Gerdau SA Momentum Declines

Gerdau SA (ADR) (NYSE:GGB) shares have declined by 6% as some traders take profits off the table from the stock’s more than 100% rally since February. Gerdau SA (ADR) (NYSE:GGB) shares have rallied strongly since that time due to better sentiment for Brazilian stocks on the back of higher crude prices and the possibility that Brazil’s President might be impeached. If Brazil’s President is impeached, the development might help the country turn around its economic troubles. Hedge fund sentiment in Gerdau SA remained unchanged during the fourth quarter, with the number of shareholders of the stock among the funds in our system remaining at ten.

Disclosure: None