Why Are These Stocks Plunging on Monday?

Analysts at Vetr have downgraded Chesapeake Energy Corporation (NYSE:CHK) to ‘Hold’ earlier today, having only a week ago downgraded it to ‘Buy’ from ‘Strong Buy’. They have also attached a price target of $9.66, which indicates an upside potential of 8.8% from Friday’s closing price. With oil prices also tumbling today, Chesapeake Energy dropped by 7%.

Although together they control 23.4% of Chesapeake Energy Corporation (NYSE:CHK)’s common stock, the elite funds from our database have withdrawn some of their capital during the second quarter. As the aggregate value of their  holdings fell by a quarterly 31.3% at the end of June, the number of funds reporting a stake in the company also dropped to 33, from 37 at the end of March. Mason Hawkins and Southeastern Asset Management decided to reduce exposure to the energy company, cutting their stake by 6% to 60.4 million shares, while Carl Icahn left his position untouched. In its latest 13F filing, Icahn Capital reported ownership of 73 million shares of Chesapeake Energy.

Another analyst report, another victim. KeyBanc Capital Markets initiated coverage on Transocean LTD (NYSE:RIG), assigning a “Sector Weight” rating according to a report sent to investors. Last week’s strong, 22% rally was halted today, as shares dropped by as much as 8.5% during the first hours of trading. In general, analysts are not thrilled about Transocean, with 13 of them recommending it as a ‘Sell’, nine believing the stock is a ‘Hold’ and only one having issued a ‘Buy’ rating. Their average one-year price target is $14.20 per share.

The popularity of Transocean LTD (NYSE:RIG) received a significant boost during the second quarter, with 32 hedge funds reporting long positions at the end of June, up from 25 a quarter earlier. Their combined holdings accounted for 8.5% of the common stock and were valued at more than $498 million. Icahn Capital is the biggest shareholder of Transocean among the funds we track, having reported ownership of 21.4 million shares in its latest 13F filing. Robert Pitts of Steadfast Capital is also bullish on the stock, having increased his investment by 76% to 1.76 million shares by the end of June.

Disclosure: none.