What is Going on With These 5 Falling Stocks?

Although crude oil is well in the green and all three indexes are moderately positive, MiMedx Group Inc (NASDAQ:MDXG), Odyssey Marine Exploration Inc (NASDAQ:OMEX), PHH Corporation (NYSE:PHH), National-Oilwell Varco, Inc. (NYSE:NOV), and Under Armour Inc (NYSE:UA) have each declined notably on Monday for various reasons. Let’s take a closer look and see what the smart money investors tracked by Insider Monkey think of each stock.

At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).

It’s been a disappointing Monday for MiMedx Group Inc (NASDAQ:MDXG) shareholders after the company announced weaker-than-expected preliminary first quarter results, sending shares down by 11.5% today. MiMedx now expects revenue of $53.4 million for the quarter versus the company’s previous guidance of $55.4 million. If revenue falls short, MiMedx’s net margin will have to rise further-than-expected in order for the company to meet EPS expectations. The company will report its complete first quarter results on the 26th of this month.

CEO Parker H. “Pete” Petit had this to say concerning his company’s quarterly performance:

“We are disappointed that our revenue fell short of our forecasted guidance by about two million dollars. After seventeen straight quarters of meeting or exceeding our revenue guidance, we had our first miss. Three key issues contributed to our first quarterly revenue shortfall. The principal one of these was the initial effects that our installation of a very sophisticated Sales Management System (SMS) had on our sales organization. The second issue related to our first quarter movement and realignment of certain sales management to prepare our surgical business for more autonomous growth. The last of the contributing issues was the distraction to our core business resulting from the initial assimilation of Stability Biologics into the organization.”

12 elite funds tracked by Insider Monkey, including Steve Cohen‘s Point72 Asset Management, held a cumulative 2.6% of the company’s float at the end of December.

Shares of deep-ocean explorer Odyssey Marine Exploration Inc (NASDAQ:OMEX) have more than halved on the news that the Mexican government has denied the company’s application for an environmental license for dredging and phosphate sand extraction at the site of the company’s Don Diego project. The government has specifically denied the license because of concerns that the dredging operations could negatively impact sea turtles. Odyssey ‘is currently evaluating all options with their Mexican legal team in order to determine which of these avenues has the highest probability of ensuring an approval for the project’. Two funds in our database held $18,000 worth of Odyssey Marine Exploration Inc (NASDAQ:OMEX) shares at the end of December.

On the next page we examine why PHH Corporation, National-Oilwell Varco, and Under Armour are all losing ground today.

PHH Corporation (NYSE:PHH) is off by 14% today after Merrill Lynch Home Loans announced its intention to move its origination of new applications for certain mortgage loan products in-house beginning April 25. Merrill Lynch Home Loans’ move could cost PHH 5% of its 2015 loan closing dollar volume on an annualized basis. Merrill Lynch Home Loans also intends to not renew its sub-servicing contract with PHH, meaning that 18% of PHH’s total servicing portfolio may have been lost. Due to the announcement, PHH has withdrawn its 2016 full year guidance, while management is considering its strategic options.

According to our data, hedge fund sentiment in PHH Corporation (NYSE:PHH) was stable in the fourth quarter. A total of 23 funds reported stakes worth $283.4 million (representing 29.20% of the float) as of the end of December, compared to 22 funds with $275.29 million in holdings at the end of September.

Despite the rising crude prices, National-Oilwell Varco, Inc. (NYSE:NOV) shares are almost 6% in the red after the company cut its quarterly dividend by 89% to $0.05 per share and the company’s management announced that first quarter revenue will be down by 20% quarter-over-quarter, from $2.7 billion in the fourth quarter. National-Oilwell Varco is cutting its dividend due to difficult industry conditions caused by weak energy prices. The dividend cut might be positive in the long run, however, as it will improve National-Oilwell Varco’s future net cash flow by $615 million per year. 26 elite hedge funds in our system owned slightly over 10% of National-Oilwell Varco, Inc. (NYSE:NOV)’s shares as of December 31.

Under Armour Inc (NYSE:UA) shares are off by 4.6% in afternoon trading after Morgan Stanley’s Jay Sole reiterated his ‘Sell’ rating on the stock. From his channel checks, Sole believes the company’s wholesale clothing sales dropped by 2% in the first quarter, while its women’s apparel sales declined by 7%. The share decline also comes a day after Under Armour spokesman Jordan Spieth suffered a disastrous loss at the Masters, losing by 3 shots after holding a 5-shot lead at the turn. Under Armour is set to release its first quarter financial results on April 21. 25 elite funds in our system owned Under Armour Inc (NYSE:UA) as of December 31, up by two from September 30.

Disclosure: None