Why These Stocks Are Tanking Today

One of the biggest losers today, Vipshop Holdings Ltd – ADR (NYSE:VIPS)’s stock has fallen off a cliff after the company announced preliminary third-quarter results. One of the biggest discount retailers in China, Vipshop said it expects revenues to range between RMB8.6 billion and RMB8.7 billion ($1.35 billion – $1.36 billion), down from previous projections of RMB9.1 billion to RMB9.3 billion ($1.42 billion to $1.46 billion). The company explained that Chinese customers have delayed purchases of autumn and winter apparel since this year’s autumn has been warmer than expected. Vipshop is set to release the actual financial report on Tuesday, November 17, after the market close.

At the end of June, roughly 17% of Vipshop Holdings Ltd – ADR (NYSE:VIPS) outstanding shares were held by 54 elite funds, up from 48 at the end of March. Tiger Cub Chase Coleman thought it was better to reduce his exposure to the stock during the second quarter, cutting his stake by 5% to a little over 15 million shares. John Burbank followed suit, reducing Passport Capital holding of Vipshop stock by 8% to 10.9 million shares.

It looks like Vipshop is dragging JD.Com Inc (ADR) (NASDAQ:JD) down as well, as investors continue to witness weakness in the retail segment. The U.S. retailers have started the earnings season on the wrong foot, falling short of analysts’ estimates and driving the stock lower. It seems it’s not just the U.S. retail sector that is affected, as JD.Com Inc (ADR) (NASDAQ:JD) also suffers from the slump in the Chinese economy, despite registering record sales on Singles’ Day.

One of the top stocks among the funds we track, JD.Com Inc (ADR) (NASDAQ:JD) registered a popularity boost as the number of funds invested rose to 75 at the end of June from 68 at the end of March. Together they controlled a bit over 25% of the company’s outstanding stock. Julian Robertson is heavily invested in this stock as well, having boosted his stake by 235% to 70.1 million shares during the second quarter, while Hillhouse Capital Management, by far the largest holder of JD.Com’s stock, slightly had its stake reduced. Lei Zhang, the fund’s manager, sold nearly 500,000 shares, leaving his fund with roughly 143 million shares.

Avon Products, Inc. (NYSE:AVP)’s stock has continued its slide, after falling by nearly 15% yesterday on fears the company might be forced to eliminate its dividend. Citing a report by Fitch Solutions, Barron’s wrote yesterday that Avon might face a liquidity crunch, as the company recently reduced its free cash flow outlook. Although Avon’s liquidity levels are “adequate”, the agency points to the company’s credit default swap spread, a measurement of investors’ willingness to pay for credit protection, reached record levels. Shares are currently trading at $2.60 apiece, down by roughly 2.5% from yesterday’s closing price.

Hedge fund interest for Avon Products, Inc. (NYSE:AVP) stock cooled down a bit during the second quarter, with the number of funds holding the stock falling to 26 from 32 at the end of March. Their presence was still a notable one, as they held 15.5% of common stock. Donald Yacktman and his fund, Yacktman Asset Management, hold the largest stake in Avon, reporting ownership of 38 million shares in its latest 13F filing for the third quarter, a minor decline from the end of June.

Disclosure: none.