Why Are These Stocks Trending In The Wrong Direction Today?

Both the NASDAQ and S&P 500 are slightly in the green this morning as positive momentum continues to buffet the market. However not all stocks are enjoying the fruits of this momentum. Five in particular are trending in the wrong direction on heavy volume. Let’s find out why and whether the catalyst is only a short-term setback or a blow to long-term formulas as well.

Cempra Inc (NASDAQ:CEMP)

• Elite Investors with Long Positions (as of June 30): 19
• Aggregate Value of Elite Investors’ Holdings (as of June 30): $171 Million
• Percentage of Shares Owned by Elite Investors (as of June 30): 11.40%

Let’s start with Cempra Inc (NASDAQ:CEMP) which has crumbled by over 35% in morning trading despite the company’s antibiotic drug solithromycin meeting its main goal in a phase 3 study, which was to be as effective as Bayer’s moxifloxacin. Despite the efficacy of the treatment, the number of adverse events suffered by patients in the study was over twice as high as those for the rival treatment, at 34.3% to 13.1%. The market reaction may be overly strong, as the occurrence of serious adverse events was much closer, at 6.9% to 5.4%, which leaves the drug fully within the realm of being a legitimate option for defeating bacteria. Cempra Inc (NASDAQ:CEMP) has a couple of big backers in Dennis Purcell’s Aisling Capital and James A. Silverman’s Opaleye Management, which have 11.22% and 6.69% of their public equity portfolio’s capital allocated to the stock respectively, as of June 30.

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WaferGen Bio-systems, Inc. (NASDAQ:WGBS)

• Elite Investors with Long Positions (as of June 30): 3
• Aggregate Value of Elite Investors’ Holdings (as of June 30): $1.51 Million
• Percentage of Shares Owned by Elite Investors (as of June 30): 16.10%

WaferGen Bio-systems, Inc. (NASDAQ:WGBS) is down by an eye-catching 22.22% after the company made a public offering of 3.92 million shares of common stock, at a price of $1 per share. In addition, each share comes with a five-year warrant to buy an additional share at $1.44, while the underwriters of the offering were also granted the option to purchase up to an additional 2.25 million shares. The blow to the stock today piles on top of an already poor week that has seen it lose 45.32% of its value. WaferGen Bio-systems, Inc. (NASDAQ:WGBS) has also lost over 65% of its value since it exploded in mid-September thanks to positive results from its Single-Cell system.

Zafgen Inc (NASDAQ:ZFGN)

• Elite Investors with Long Positions (as of June 30): 12
• Aggregate Value of Elite Investors’ Holdings (as of June 30): $101 Million
• Percentage of Shares Owned by Elite Investors (as of June 30): 10.80%

Zafgen Inc (NASDAQ:ZFGN) is another stock that has been highly volatile of late, which is not uncommon for early-stage biotechs. It plummeted on October 12 and 13, followed by a bounce-back on October 14. Now, shares are falling again, down by over 36% today after its beloranib treatment for Prader-Willi Syndrome was put on clinical hold by the FDA. Zafgen announced on Wednesday that a patient in a study of the drug had died, though no cause of death was given. Prader-Willi Syndrome is a genetic disorder that results in obesity and a high mortality rate for those afflicted. Top line results of the study are still expected by the first quarter of 2016. Healthcare investor James Flynn of Deerfield Management held 1.01 million shares of Zafgen Inc (NASDAQ:ZFGN) on June 30.

On the following page we’ll look at two more of the day’s biggest losers, including one of the biggest oil companies in the world.

Quanta Services Inc (NYSE:PWR)

• Elite Investors with Long Positions (as of June 30): 38
• Aggregate Value of Elite Investors’ Holdings (as of June 30): $870 Million
• Percentage of Shares Owned by Elite Investors (as of June 30): 14.60%

Quanta Services Inc (NYSE:PWR) is down by 28.23% today after it slashed its earnings forecast for the third quarter to a range of $0.22-to-$0.24 per share, well below its previous guidance of $0.34-to-$0.40 per share. Analysts will be even more taken aback, given that their consensus EPS estimate for the quarter stood at $0.45. The stock has now plunged to a four-year low as a result of today’s drop, which is further due to Quanta Services Inc (NYSE:PWR) also warning that its prior fourth quarter revenue guidance may come up short as well, by as much as $200 million. That will surely irk billionaire Ken Griffin, who held a large stake in the electrical contracting services company of 7.50 million shares.

Halliburton Company (NYSE:HAL)

• Elite Investors with Long Positions (as of June 30): 69
• Aggregate Value of Elite Investors’ Holdings (as of June 30): $4.21 Billion
• Percentage of Shares Owned by Elite Investors (as of June 30): 11.50%

Lastly is Halliburton Company (NYSE:HAL), which is now down by 4.42% today. The dip appears to be triggered by investor unease leading into Halliburton’s third quarter earnings release on Monday, particularly given the recent warnings issued by rival Schlumberger Limited. (NYSE:SLB), which is also down by over 4% today. In its own earnings release last night, Schlumberger CEO and Chairman, Paal Kibsgaard suggested the industry downturn would last for “decades” and that crude oil continues to face heavy pressure.

Nonetheless, elite investors see a lot to like about Halliburton Company (NYSE:HAL), as sentiment for the oil field services company was strong among the investors that we track during the second quarter. Ownership of the stock rose by nine firms, while the value of the aggregate stakes collectively held by those firms jumped by over $1.2 billion, despite the stock declining in value slightly during that time.

Disclosure: None