What’s the Deal With These 5 Tanking Stocks?

With several major tech companies due to report earnings in the coming days, the NASDAQ and S&P 500 are strangely quiet. The NASDAQ is off by just one-quarter of a percentage point, while the S&P 500 is flat. Among the stocks that aren’t quiet today are ICON PLC (NASDAQ:ICLR), Amira Nature Foods Ltd (NYSE:ANFI), Barnes Group Inc. (NYSE:B), Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), and JD.Com Inc(ADR) (NASDAQ:JD), the shares of which are all getting beat down by investors today. Let’s find out why investors are selling and see what world-class hedge funds 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).

ICON in the Red After Earnings

ICON PLC (NASDAQ:ICLR) shares have declined by 8.2% after the company reported mixed first quarter financial results. For the January-to-March period, Icon earned $1.12 per share on sales of $400.52 million, beating the bottom-line estimate by $0.01 per share but missing the top-line consensus mark by $13.83 million. Although the company’s backlog rose by 9% year-over-year to $3.95 billion, ICON reported net debt of $100 million as of the end of March, compared to a net cash balance of $172 million on March 31, 2015. The net debt balance was $58 million better than that of the previous quarter, however. The number of top funds that we track that owned shares of ICON PLC (NASDAQ:ICLR) dropped by six to 21 during the fourth quarter. Those 21 funds owned 4.5% of ICON’s float.

Amira Nature Foods Reports Disappointing First Half of Fiscal Year 2016 Results

Amira Nature Foods Ltd (NYSE:ANFI) is almost one-fifth lower today after the company reported EPS of $0.38 on sales of $231.7 million for the first half of fiscal year 2016, ended September 30, 2015. Sales declined by 17.3% year-over-year while adjusted EBITDA fell to $30.5 million from $38.8 million. CEO Bruce Wacha discussed some of the challenges faced by the company during the fiscal period in a press release:

“We faced an extremely challenging first half of fiscal 2016 which included current industry trends toward lower pricing, currency translation, three years of re-audits, certain litigations and other temporary short term related business disruptions that required increased financial resources and management time.”

Amira Nature Foods Ltd (NYSE:ANFI) has had some accounting difficulties in the past. Of the 786 active funds that we track, five of them owned slightly under $2 million worth of Amira’s shares at the end of 2015.

On the next page we analyze why Barnes Group Inc, Ironwood Pharmaceuticals Inc, and JDCom Inc(ADR) are all trading lower today.

Traders Sell Barnes Due to Earnings

Although Barnes Group Inc. (NYSE:B) reported in-line earnings of $0.54 for the first quarter, the company missed sales estimates by $9.95 million with revenue of $288.33 million, which has led to its shares dipping by 10.8% today. Revenue missed estimates because organic sales declined by 7% year-over-year due to weaker demand and a stronger dollar. Adjusted operating margin fell by 20 basis points to 14.7%. The company’s 2016 adjusted diluted EPS guidance was unchanged, however, at $2.43-to-$2.58. Management expects 2016 organic revenue growth of 0%-to-2%, with total revenue growth of 2%-to-4% after an adjustment of 1% for unfavorable foreign exchange and a positive 3% adjustment from acquisition revenue. Barnes Group Inc. (NYSE:B) was in the portfolios of ten hedge funds in our system at the end of December.

Ironwood Pharmaceuticals Drops on Drug Purchase

Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) is 9.4% lower today after the company entered into a U.S licensing agreement with AstraZeneca plc (ADR) (NYSE:AZN) for the rights to the FDA-approved lesinurad, which is expected to commercially launch in the second half of this year, for the treatment of hyperuricemia associated with uncontrolled gout. Traders could be selling because of the purchase price. For the exclusive U.S rights to all products containing lesinurad, Ironwood Pharmaceuticals will pay $100 million up front and tiered single-digit royalties and other milestones amounting to up to $165 million. Ironwood`s management expects the deal to be accretive by 2019, with anticipated annual sales to exceed $300 million at their peak. The number of top funds that held shares of Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) rose by three quarter-over-quarter to 20 at the end of December.

Technical Selling Detected at JD.com

Technical traders are playing a big part in JD.Com Inc(ADR) (NASDAQ:JD)‘s action today after the stock recently sliced through several key moving averages. Given that peer Alibaba Group Holding Ltd (NYSE:BABA) hasn’t fallen by much today, today’s 7.5% drop for JD.Com Inc could prove to be a buying opportunity if the company’s earnings release on May 9 doesn’t disappoint and there is no additional non-public bad news that comes out. Of the 786 active funds that we tracked as of December 31, 78 of them owned $10.84 billion of JD.Com Inc(ADR) (NASDAQ:JD)’s shares, up from 71 funds owning $9.1 billion in shares on September 30.

Disclosure: None