Why Are These Stocks Deep In Red on Friday?

With most of earnings season over and the Fed committed to low interest rates for longer, volatility on Wall Street is almost non-existent. The S&P 500 is up only marginally while the Dow Jones is down 27 points. Among the stocks falling today are EXCO Resources Inc (NYSE:XCO), Companhia Siderurgica Nacional (ADR) (NYSE:SID), Freeport-McMoRan Inc (NYSE:FCX), Eagle Point Credit Company Inc (NYSE:ECC), and Intrexon Corp (NYSE:XON). Let’s find out why investors are selling these stocks today and analyze hedge fund sentiment towards them.

While there are many metrics that investors can assess in the investment process, the hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which 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).

EXCO Decline on Potential Restructuring

EXCO Resources Inc (NYSE:XCO)’s shares have plunged by 44% after the company announced that its board of directors had formed a committee to consider one or more strategic alternatives. Among the strategic alternatives is restructuring the company to improve its capital structure and to provide additional structural liquidity. That means potentially exchanging existing indebtedness for common stock, the issuance of equity, and divestiture of assets, among other things. EXCO Resources Inc (NYSE:XCO) had more than $1.3 billion of long term debt on its balance sheet at the end of March. Jim Simons’ Renaissance Technologies was among the top shareholders of EXCO at the end of 2015.

Companhia Siderurgica Nacional Down After Earnings

Companhia Siderurgica Nacional (ADR) (NYSE:SID) reported net income of 391.8 million reais ($111.68 million) for the first quarter of 2016, on revenue of 3.85 billion reais ($1.1 billion). Revenue at the company fell 4% year-over-year, while steel sales were 10% sequentially higher in tonnage terms. The results came in under expectations and the company’s shares are down 8% in afternoon trading. Four funds from our database owned $339,000 worth of Companhia Siderurgica Nacional (ADR) (NYSE:SID)’s stock heading into 2016.

On the next page, we examine the latest news regarding Freeport-McMoRan, Eagle Point Credit Company, and Intrexon Corp.

Freeport-McMoRan Falls on Congo Tax Speculation

Freeport-McMoRan Inc (NYSE:FCX)’s stock is down by almost 4% after Congo’s mines minister said that he thinks the company is concealing the true value of its sale of the Tenke copper project in Congo. Freeport previously agreed to sell its majority stake in the mine to a Chinese company for $2.65 billion in cash. The minister thinks that Freeport should pay more taxes on the deal. Carl Icahn’s Icahn Capital LP reported ownership of 104 million shares of Freeport-McMoRan Inc (NYSE:FCX) in its 13F filing for the fourth quarter.

Secondary Offering Sinks Eagle Point 

Eagle Point Credit Company Inc (NYSE:ECC) is trading 14% lower after the company announced that it had priced its 1.25 million-share secondary offering at $17.65 per share. The underwriters of the offering have an option to buy an additional 187,500 shares. The company plans to use the net proceeds of $20.9 million to acquire investments and for general working capital purposes.

Intrexon Down on Bearish Article

Intrexon Corp (NYSE:XON) shares are 2% in the red after TheStreet’s Adam Feuerstein became the latest pundit to question the company’s technology. In his article, Feuerstein writes”

“I don’t trust [CEO] R.J. Kirk because very few of the claims he makes about any of Intrexon’s synthetic biology business ventures are backed with independently verifiable information. It’s all promise, no proof. Intrexon is very much like Theranos. I’m not the first person to make this comparison, but it is fitting.”

A bearish writer on Seeking Alpha previously wrote an expose on the company too. Some hedge funds might disagree with the bearish sentiment, however. Of the 786 elite funds we track, 19 funds owned $259.84 million worth of Intrexon Corp (NYSE:XON)’s shares, which accounted for 7.40% of the float on December 31, versus 17 funds and $205.51 million respectively a quarter earlier.

Disclosure: none