Why Potash (POT), Twitter (TWTR), Oncomed, Caterpillar and Diamond Resorts Are All Sinking Today

Oncomed Pharmaceuticals Inc (NASDAQ:OMED), a small-cap clinical development-stage biopharmaceutical company is down by more than 42% after issuing a negative update concerning its study of a pancreatic cancer treatment, which is currently undergoing Phase 2 trials.

“The findings communicated by the DSMB [data safety monitoring board] suggest a low likelihood of a statistically significant benefit in overall survival in the tarextumab ALPINE pancreatic cancer trial.” The Chief Executive added that the company’s aim is “to quickly unblind the trial and work with our clinical sites and investigators to verify, analyze, interpret, and fully understand the data, including Notch biomarker subgroup trends, and determine next steps,” said Paul J. Hastings, Chairman and CEO of the company.

Today’s results may come as a surprise for some of the hedge funds that we track, which seemed quite bullish on the stock. Over the third quarter of last year, the number of hedge fund long positions rose by 25%. As of September 30, ten funds in our database declared being long Oncomed Pharmaceuticals Inc (NASDAQ:OMED), with their combined holdings accounting for 8.5% of the company’s total shares.

Caterpillar Inc. (NYSE:CAT) is also falling in Monday trading, down by approximately 4% in the early afternoon. The descent seems to have been prompted by Goldman Sachs’ downgrade of the stock, to ‘Sell’ from ‘Neutral’. The firm declared a $51.00 price target on the stock, which implies 13.5% downside potential from today’s market open. The analyst cited weakness in emerging markets, which could lead to reduced demand in the commodities segment, and excess capacity, among other factors.

However, it seems like hedge funds are quite bullish on Caterpillar Inc. (NYSE:CAT) long-term. By the end of the third quarter, the Bill & Melinda Gates Foundation Trust disclosed ownership of 11.26 million shares of the company, or almost 2% of the total shares.

Finally, there’s Diamond Resorts International Inc (NYSE:DRII), which is trading down more than 10% in Monday’s early afternoon hours, after a New York Times article published Friday questioned its business practices. According to the note, the company uses high-pressure sales strategies, with Jeff Weir, a Diamond timeshare owner and RedWeek journalist, telling the Times that in his experience, Diamond is much more ambitious, aggressive and downright nasty in its sales presentations compared to Marriott International Inc. (NASDAQ:MAR) and Westin.

Diamond Resorts responded to the allegations in a letter, where it assured that it has a “strict set of sales policies and practices aimed at protecting the consumer that are in-line with industry best practices,” adding that there’s a “zero tolerance policy for any member of the sales team who does not follow protocol.”

Before these practices were revealed, it seems like hedge funds in our database liked Diamond Resorts International Inc (NYSE:DRII). During the third quarter, the number of firms in our database long the stock rose by 18.5%, to 32. Their combined holdings accounted for 16.9% of the company’s shares as of September 30.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned in this article.