Why Three Biotech Stocks Are Getting Pounded Alongside A Financial Stock Today

U.S stocks are trading higher today, helped by a surge in oil prices as gasoline and distillate inventories fell last week. The topic of the day is still the Federal Reserve’s interest rate decision, although investors seem to be relaxed, signaling that they do not expect something extraordinary to surface following the two-day policy meeting. While most investors are celebrating another day of gains, shareholders of Macrocure Ltd (NASDAQ:MCUR), IDEXX Laboratories, Inc. (NASDAQ:IDXX), GenMark Diagnostics, Inc (NASDAQ:GNMK) and EverBank Financial Corp (NYSE:EVER) are not thrilled at all, as their shares are getting battered by pessimism blows. Let’s have a look at why these stocks have plunged today.

We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 53 percentage points (102% return vs. S&P 500’s 48.7% gain) over the last 37 months (see the details here).

First up is Macrocure Ltd (NASDAQ:MCUR), a biotechnology company based in Israel. The company today announced that its lead drug CureXcell failed late-stage tests in patients suffering from diabetic foot ulcers. The drug contains living human white blood cells designed to aid the healing process and stimulate wound closure. Following the news, shares of Macrocure fell sharply and are currently down by more than 60%. None of the hedge funds that we track held a position in Macrocure Ltd (NASDAQ:MCUR) as of the end of June.

A provider of diagnostic systems and services, IDEXX Laboratories, Inc. (NASDAQ:IDXX) announced its 2015 third quarter financial results today, posting mixed results. The company registered $406 million in revenues, missing expectations of $407.1 million, and earnings per share of $0.48. Adjusted for asset impairment costs, earnings stood at $0.54 per share, topping Wall Street estimates of $0.53 per share. IDEXX Laboratories also revised its full year guidance, and is now expecting revenues of $1.6 billion-to-$1.61 billion, while earnings are estimated to be between $2.04 and $2.07 per share. Investors were not convinced, and shares have tumbled by as much as 15% so far today.

At the end of June, Select Equity Group held the largest stake in IDEXX Laboratories, Inc. (NASDAQ:IDXX) among the funds we follow. Robert Joseph Caruso boosted the fund’s holding by 169% to 4.17 million shares, while Richard Chilton increased his investment by 731% to 1.49 million shares. During the second quarter, hedge fund sentiment towards the stock had improved, with the number of funds invested in it increasing to 28, from 24 at the end of March, while the value of their holdings inched higher to $586 million. Their combined positions account for 9.8% of the company’s common stock.

Head to the next page to find out more about GenMark Diagnostics and EverBank Financial Corp.

Shares of GenMark Diagnostics, Inc (NASDAQ:GNMK) fell sharply during the first hour of trading today, but later managed to stage a comeback, leaving them currently down by 10%. The market reacted negatively to the company’s latest financial report despite the fact that revenues and profits beat estimates. GenMark registered $8.5 million in revenues and a loss of $0.27 per share, while Wall Street was expecting revenues of $8.3 million and a loss per share of $0.31. This just adds salt to the stock’s wounds, as it has been steadily declining this year, down by more than 50% in 2015, culminating with it hitting a new low today.

GenMark Diagnostics, Inc (NASDAQ:GNMK) gained some popularity among elite funds during the second quarter, as the number of funds reporting long positions in GenMark as of the end of the second quarter stood at 13, up from nine as of the end of the first quarter. Their aggregate holdings account for 15% of the company’s outstanding stock and were valued at $57.7 million. Phill Gross and Robert Atchinson are big fans of the stock, boosting their investment by 11% to amass roughly 2.02 million shares, as reported in Adage Capital Management’s latest 13F filing.

The series of poor financial results is continued by EverBank Financial Corp (NYSE:EVER), which missed Wall Street’s revenues estimate by a mile. The company posted $210 million in revenues for the third quarter, well below estimates of $244.5 million, while its net income of $0.21 per share also missed the consensus of $0.23 per share. EverBank Financial Corp (NYSE:EVER)’s management lamented the “difficult market environment” and unusual items it incurred, but is confident in its ability to make up for it during the fourth quarter. None of the hedge funds we track reported ownership of this stock as of the end of the second quarter.

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