What is Going On With These Falling Stocks?

While crude prices are now at a monthly high and the S&P 500 is above 2,100, some stocks have been left behind. Among the stocks deep in the red today are Rambus Inc. (NASDAQ:RMBS), International Business Machines Corp. (NYSE:IBM), Brown & Brown, Inc. (NYSE:BRO), MGIC Investment Corp. (NYSE:MTG), and Myriad Genetics, Inc. (NASDAQ:MYGN). Let’s examine why investors have been selling these equities at a discount and analyze relevant hedge fund sentiment towards these stocks among the top investors tracked by Insider Monkey .

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).

Rambus Shares Down Following First Quarter Miss

Rambus Inc. (NASDAQ:RMBS) shares have retreated by 7% after the company missed revenue estimates. Although its bottom-line beat estimates by $0.01 per share with EPS of $0.13 for the first quarter, Rambus’ sales missed by $0.55 million and fell by 0.3% year-over-year to $72.7 million. Revenue fell because of lower royalty revenue, which declined by 6.1% in the quarter to $62.88 million. The company’s guidance for the second quarter was also lower-than-expected. Rambus is guiding for $72-to-$77 million in revenue versus expectations of $78.7 million. Hedge fund ownership in Rambus Inc. (NASDAQ:RMBS) is light. Eight funds out of the 785 or so funds that we track owned Rambus shares at the end of December.

IBM Shares Fall 5% 

International Business Machines Corp. (NYSE:IBM) shares are 5.5% in the red in late morning trading after the company reported its first quarter earnings. Although the tech giant earned $2.35 per share on revenue of $18.68 billion, beating estimates by $0.26 per share and $400 million, respectively, the company’s gross margin dropped by 170 basis points year-over-year to 46.5%. The company’s tech services and cloud platform sales also dropped by 1.5% year-over-year and part of the bottom-line beat was due to a $1.2 billion tax benefit. Despite the uninspiring quarter, some investors will stick around. That’s partly because Warren Buffett‘s Berkshire Hathaway owned 81.03 million shares of International Business Machines Corp. (NYSE:IBM) at the end of December and continues to consider it a great long-term holding.

On the next page, we take a closer look at why Brown & Brown Inc, MGIC Investment Corp, and Myriad Genetics Inc. are all incurring declines today.

Brown & Brown Earnings Fall Short of the Mark

Brown & Brown, Inc. (NYSE:BRO) reported a mixed first quarter and shareholders have punished the stock with a 3.5% drop because of it. For the January-to-March period, Brown & Brown earned $0.44 per share on revenue of $424.2 million, beating earnings estimates by $0.02 per share but missing sales expectations by $0.89 million. Organic revenue increased by just 1.3% year-over-year. Joel Greenblatt‘s Gotham Asset Management owned 236,444 shares of Brown & Brown, Inc. (NYSE:BRO) at the end of December.

MGIC Falls on Earnings

MGIC Investment Corp. (NYSE:MTG) shares are 4% in the red after the company reported first quarter earnings of $0.17 per share on revenue of $258.6 million, versus expectations of $0.22 per share and $258.88 million, respectively. New insurance written dropped by 7.7% to $8.3 million while insurance in force rose by 5.4% to $175 million. In better news, the company’s primary delinquent inventory dropped by 23% year-over-year to 55,590 loans. Book value for MGIC Investment Corp. (NYSE:MTG) ended March at $6.88 per share. 42 top funds we track in our database owned slightly over one-third of the company’s float at the end of December.

Technical Selling Detected at Myriad 

Myriad Genetics, Inc. (NASDAQ:MYGN) shares have retreated by 7.8% on high volume due to technical selling. The stock has fallen below some key technical moving averages as sentiment isn’t as bullish as it was over the past few weeks. Myriad Genetics is expected to present at the 2016 American Association for Cancer Research Annual Meeting in New Orleans between the 16th and 20th of this month, highlighting early clinical trials of PARP inhibitors targeting the DNA repair pathway and the use of new biomarkers to select patients with various ailments for treatment. Jim Simons‘ Renaissance Technologies owned almost 1.00 million shares of Myriad Genetics, Inc. (NASDAQ:MYGN) at the end of December.

Disclosure: None