What Sent These Five Stocks Lower on Monday?

The US stock market started the last trading week of 2015 on a slightly negative note, with major indices losing ground on Monday. Among thousands of stocks,  Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Chimerix Inc (NASDAQ:CMRX), Iconix Brand Group Inc (NASDAQ:ICON), Chesapeake Energy Corporation (NYSE:CHK), and Freeport-McMoRan Inc (NYSE:FCX) have depreciated significantly on the back of different events. Let’s take a closer look at the developments that sent these stocks lower on Monday and see what the funds from our database think about them.

At Insider Monkey, we track over 730 hedge funds and other institutional investors. By analyzing their quarterly 13F filings we determine the stocks that they are collectively bullish on, which allows us to mimic some of these picks and beat the market. Our focus is the small-cap picks of the investors we track and by imitating the 15 most popular small-cap stocks among these funds we have managed to generate returns of around 102% since August 2012, outperforming the S&P 500 ETF (SPY) by some 53 percentage points (see more details here).

Let’s start with Valeant Pharmaceuticals Intl Inc (NYSE:VRX), whose stock is down by around 10% after news that its CEO Michael Pearson was hospitalized due to pneumonia. A group of executives will take Pearson’s role until he recovers, the company said. Today’s drop ended several days of gains that slightly offset the losses registered in the past several months. In this way, Valeant Pharmaceuticals Intl Inc (NYSE:VRX)’s stock is down by more than 50% in the last six months and has lost 28% since the beginning of the year. Despite the decline registered by the stock, most smart money investors remain optimistic about Valeant Pharmaceuticals Intl Inc (NYSE:VRX) that has also two activists among its top shareholders. Bill Ackman‘s Pershing Square and Jeff Ubben’s ValueAct Capital are two of the 88 funds from our database that are long Valeant as of the end of September, down by 98 funds a quarter earlier.

Then there is Chimerix Inc (NASDAQ:CMRX), whose shares are over 80% in the red on the back of the disappointing results of Phase 3 trial SUPPRESS its oral antiviral drug brincidofovir that was tested in patients undergoing hematopoietic cell transplantation. According to the company, brincidofovir did not manage to achieve the primary endpoint for the prevention of cytomegalovirus infection (a member of the herpes virus family) in 24 weeks since the transplant.

“Preliminary analysis suggests that the primary endpoint failures in both the prevention of CMV infections and mortality in the brincidofovir arm were driven by confirmed cases of graft-versus-host-disease (GVHD),” the company said in a statement.

Among the funds we follow, Chimerix Inc (NASDAQ:CMRX) is not very popular with only 17 funds reporting long positions in the last round of 13F filings, amassing around 12% of its outstanding stock. Healthcare-focused funds Jeremy Green’s Redmile Group and Samuel Isaly’s OrbiMed Advisors are among the company’s top shareholders, owning 1.07 million shares and 1.02 million shares, respectively.

On the next page, we are going to discuss what led to the decline of the other three stocks.