What’s the Deal With These Five Stocks Trading in Red on Tuesday?

The Dow Jones index is flat and the S&P 500 and NASDAQ index are modestly in the red, amid reports that the International Monetary Fund cut its global growth outlook for the next two years on the back of Brexit-related uncertainty in the European Union. The IMF now forecasts a global growth of 3.1% this year and 3.4% in 2017, both figures having been cut by 0.1 percentage points.

Meanwhile, five companies, SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN), Ryerson Holding Corp (NYSE:RYI), Skypeople Fruit Juice Inc (NASDAQ:SPU), Ballard Power Systems Inc. (USA) (NASDAQ:BLDP), and Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) are registering declines significantly below the market. In this article, we analyze why traders are selling and see what the funds that we track at Insider Monkey think about the companies in question.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).

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SciClone Updates on Strategic Review

SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN) shares have retreated by 16% today after the company provided an update on its strategic review process previously announced in February. According to the update, SciClone is ‘no longer continuing active discussions with potential acquirers’ and SciClone plans to remain an independent company. None of the bids under discussion during the strategic review process with interested parties were at a premium to the SciClone’s recent unaffected trading price. For 2016, management expects non-GAAP EPS of $0.70 to $0.74 on revenue of $158 million to $163 million. Jim Simons’ Renaissance Technologies raised its stake in SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN) by 60% to 932,300 shares during the first quarter.

Ryerson Drops on Offering

Ryerson Holding Corp (NYSE:RYI) is almost 12% in the red today after the company commenced an underwritten public offering of 5 million shares of common stock. The company has also granted the underwriters the customary 30 day option to buy an additional 750,000 shares. Ryerson intends to use the net proceeds to reduce debt. Just three funds from our database owned $2.52 million worth of Ryerson Holding Corp (NYSE:RYI) shares, which accounted for 1.40% of the float on March 31.

On the next page, we find out why traders are selling Skypeople Fruit Juice, Ballard Power Systems, and Telefonaktiebolaget LM Ericsson.

Skypeople Volatility Continues

Nano-cap Skypeople Fruit Juice Inc (NASDAQ:SPU) shares are down by 13% today as some traders take profit on the stock’s big run-up since the beginning of July. Another reason for the selling is Skypeople’s statement made yesterday that online reports from the Chinese website EGD1319.com that Future World Group had successfully gained a listing on NASDAQ by acquiring SkyPeople is inaccurate. For those interested, this link contains the actual details related to Future World.

Traders Take Profits on Ballard Power 

A day after surging sharply on the news that Ballard had won a landmark local fuel cell production contract with an estimated value of $168 million over five years, some traders are taking profits on Ballard Power Systems Inc. (USA) (NASDAQ:BLDP). Shares of the company are off by more than 18%, while the broader indexes are close to flat. Although the contract win will certainly help Ballard’s top-line, it remains to be seen whether the company’s management can deliver the growth and earnings that investors expect in the long run. Two funds tracked by Insider Monkey had a bullish position in Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) at the end of the first quarter.

Ericsson Declines on Earnings

Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) shares are 6.3% in the red today after the company reported earnings of 0.83 Swedish Krona ($0.10) per share on revenue of 54.1 billion Swedish Krona ($6.28 billion) for the second quarter. Analysts were expecting earnings of 0.30 Swedish Krona ($0.03) higher. Sales as reported declined by 11% year-over-year due to soft mobile broadband sales caused by a weak macro-economic environment. The company is committed to further reduce its costs to partially compensate. The number of funds from our database with holdings in Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) advanced by seven quarter-over-quarter to 13 at the end of March.

Disclosure: none