Why Are These Stocks Trading Deep in Red on Friday?

The key technical levels of 18,000 for the Dow and 2,100 for the S&P seem out of reach today as each index is in the red on the back of disappointing earnings reported by several tech giants. Among the stocks that plunged on Friday are Hawaiian Holdings, Inc. (NASDAQ:HA), SVB Financial Group (NASDAQ:SIVB), Chemours Co (NYSE:CC), Exelixis, Inc. (NASDAQ:EXEL), and Visa Inc (NYSE:V). Let’s find out why traders are selling and see what the smart money investors from our database think about these five companies.

The hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track nearly 800 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

Hawaiian Flies Lower on Mixed Quarter

Hawaiian Holdings, Inc. (NASDAQ:HA)’s stock is 10.7% in the red after the airline reported a mixed first quarter, with EPS of $0.80 on sales of $551.18 million, versus estimates of $0.76 per share and $558.23 million. Guidance is a bit soft, with management expecting full-year Available Seat Miles to rise between 2.5% to 5.5% and Cost per ASM, excluding fuel, to be up low single digits. Of the around 786 funds we track, 23 funds owned $220.13 million of Hawaiian Holdings, Inc. (NASDAQ:HA)’s shares, which accounted for 11.70% of the float on December 31, versus 22 funds and $186 million, respectively, on September 30.

SVB Declines on Earnings Miss

SVB Financial Group (NASDAQ:SIVB) reported a disappointing first quarter and its stock is down 6.17% because of it. For the time period between January 1 and March 31, SVB Financial earned $1.52 per share on sales of $367.5 million, missing by $0.18 per share and $9.02 million, respectively. The company’s average loan balance increased 8% year-over-year to $17 billion, while net interest margin inched up 13 basis points to 2.67%. CEO Greg Becker said:

“Our core business remained healthy in the first quarter, with outstanding loan growth and solid core fee income. Credit overall remained sound, although softness in the VC markets pressured our early-stage loan portfolio and drove lower warrant and VC-related investment gains.”

Ken Fisher’s Fisher Asset Management owned more than 1.4 million shares of SVB Financial Group (NASDAQ:SIVB) at the end of December.

On the next page, we will take a look at the news behind the moves of Chemours Co, Exelixis, and Visa.

Technical Traders Sell Chemours

Chemours Co (NYSE:CC) is trading almost 7% lower today as technical traders take profits on the company’s intermediate-term rally, in which shares of the company have tripled from their February lows. Despite today’s sell-off, the technical picture is still bullish, as Chemours is above its 200 simple day moving average. A total of 22 investors in our database held $190.84 million worth of Chemours Co (NYSE:CC) shares heading into 2016, versus 24 funds and $171.78 million, respectively, a quarter earlier.

Technical Selling Weigh on Exelixis’ Stock

Although there is no fundamental news concerning Exelixis, Inc. (NASDAQ:EXEL) today, shares of the company are 3% lower as technical investors sell due to the broader market sell-off. The NASDAQ index is down 1.22%, and some traders are in ‘risk-off’ mode until better economic or earnings data hit the wires. Mark Kingdon’s Kingdon Capital was one of the 17 savvy investors that we track that held shares in Exelixis, Inc. (NASDAQ:EXEL) as of the most recent 13F reporting period.

Visa Lower Despite Earnings Beat

Visa Inc (NYSE:V)’s shares have retreated by 3.5% today, despite the company reporting better-than-expected results on Thursday. For its fiscal second quarter, Visa posted EPS of $0.68 per share on revenue of $3.63 billion, beating estimates by $0.01 per share and $30 million, respectively. The payment volume rose by 12% year-over-year to $1.3 trillion, while cross border volume inched up 5%. Perhaps causing today’s decline is soft guidance. The management expects sales to rise between 7% and 8% the full year, versus the previous guidance of high single-digit to low double-digit percentage growth. Profit guidance is also lower, with the company now expecting low double-digit net income growth, versus the previous mid-teens growth. Nevertheless, some investors will still stick with Visa Inc (NYSE:V), such as Warren Buffett’s Berkshire Hathaway, which was one of the top holders of the company at the end of the fourth quarter.

Disclosure: none