Why Are These Stocks Deep In the Red Today?

With the market plunging further in the intraday trading on Friday, shares of Walt Disney Co (NYSE:DIS), Itau Unibanco Holding SA (ADR) (NYSE:ITUB), Great Basin Scientific Inc (NASDAQ:GBSN), Osiris Therapeutics, Inc. (NASDAQ:OSIR), and YRC Worldwide Inc (NASDAQ:YRCW) are among the top losers. Let’s take a closer look at why each stock is losing ground.

Moreover, we will also examine relevant hedge fund sentiment toward the equities. In the eyes of most traders, hedge funds are assumed to be underperforming, old investment tools of the past. While there are more than 8000 funds in operation at present, Hedge fund experts at Insider Monkey look at the aristocrats of this group, around 730 funds. Contrary to popular belief Insider Monkey’s research revealed that hedge funds underperformed in recent years because of their short positions as well as the huge fees that they charge. Hedge funds managed to outperform the market on the long side of their portfolio. In fact, the 15 most popular small-cap stocks among hedge funds returned 102% since the end of August 2012 and beat the S&P 500 Index by 53 percentage points (see the details here).

Despite ‘Star Wars:The Force Awakens’ pulling in a record $57 million on Thursday, Walt Disney Co (NYSE:DIS) shares are off by more than 3.7% after the analysts at BTIG Research downgraded the stock to ‘Sell’ from ‘Neutral’ and cut their price target to $90 from $108. The analysts downgraded Disney because they think the company’s core ESPN segment is in secular decline given the cord-cutting trend. The analysts note that ESPN has the highest percentage of fixed costs in the industry and think that metric could lead to trouble if ESPN’s revenues continue to head South. Like other Disney bears, the analysts don’t see an online ESPN stand-alone offsetting the cable division’s attrition. Hedge fund sentiment towards Walt Disney Co (NYSE:DIS) is a little less optimistic, with 48 elite funds long the stock at the end of September, down by 12 funds from June 30.

Itau Unibanco Holding SA (ADR) (NYSE:ITUB) shares fell by another 4.5% today as Brazil’s economy remains in its worst slump since the Great Depression. Investors worry that the country’s weak macro-economic picture and high unemployment rate will lead to more write-offs and lower profits for the bank. With Itau Unibanco Holding SA (ADR) (NYSE:ITUB) trading for 1.47 times book value, the stock is also more expensive than many of its American peers despite the fact that the U.S. economy is strong and Brazil’s economy is weak. Cliff Asness’ AQR Capital Management owned 8.02 million shares at the end of the third quarter.

On the next page, we examine Great Basin Scientific, Osiris Therapeutics, and YRC Worldwide.

Great Basin Scientific Inc (NASDAQ:GBSN) has plunged by 17.95% as the sentiment around the stock remains depressed. Shares of the company are down by 98.15% year-to-date, as Great Basin had $7.3 million in cash, $16.89 million in total assets, and $36.17 million in total liabilities as of September 30. Three funds that we track owned 3.9% of Great Basin Scientific Inc (NASDAQ:GBSN)’s float at the end of the third quarter.

Shares of Osiris Therapeutics, Inc. (NASDAQ:OSIR) have given back some of their recent gains as its stock has fallen by 6.79% on the news that Osiris’ public accounting firm, BDO USA, is resigning. BDO made this decision because (in the auditor’s opinion):

“The effectiveness of the Company’s internal controls over financial reporting as of December 31, 2014 should no longer be relied upon due to management’s identification of a material weakness in internal controls over financial reporting related to the timing of revenue recognition under certain distribution contracts.”

Because of the conflict, Osiris Therapeutics, Inc. (NASDAQ:OSIR) will restate its first and second quarter financial results and will amend its 2014 annual report. The company hopes to use Ernst & Young as its auditor moving forward.

Wrapping up our list of red stocks is YRC Worldwide Inc (NASDAQ:YRCW), whose shares are off 9.38% on the news that industry peer Knight Transportation (NYSE:KNX) cut its fourth-quarter earnings guidance to $0.31-$0.33 per share, mainly because of fewer non-contracts and lower revenue per total mile. Investors worry YRC Worldwide Inc (NASDAQ:YRCW) could experience the same type of unfavorable trends and report lower than expected quarterly results. Hedge fund sentiment towards YRC is positive, however, with 27 funds amassing 49.2% of the company’s float as of the end of September.

Disclosure: none