Why Tyson Foods, Fitbit, and Three Other Stocks Are Down As Major Indices Are in Green

U.S. markets are trading up in the first day of the week, helped by Janet Yellen’s speech, in which she reiterated the plans to raise the interest rates, although she avoided to give a timeline on the decision. Major U.S. stock indexes are also being helped by a rally in energy shares and a recuperation in financial stocks, which had experienced considerable weakness following Friday’s jobs report. However, a few stocks, including Tyson Foods, Inc. (NYSE:TSN), Fitbit Inc (NYSE:FIT), Mirati Therapeutics, Inc. (NASDAQ:MRTX), Hercules Offshore, Inc. (NASDAQ:HERO) and Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) are trading down on Monday afternoon. So, let’s take a look into the events behind the declines of these stocks, and analyze what the hedge funds in our database think about the companies in question.

While there are many metrics that investors can assess in the investment process, hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

Tyson Beat Up By BMO

Let’s start with Tyson Foods, Inc. (NYSE:TSN), whose stock has inched down by 4% on Monday afternoon, after analysts at BMO Capital Markets downgraded the stock to ‘Market Perform’ from ‘Outperform’, while trimming their price target to $69 from $78, arguing that valuations for meat producers’ stocks are already high enough. A total of 40 hedge funds among those we track were long Tyson Foods, Inc. (NYSE:TSN) at the end of the first quarter of 2016. In this group, we could highlight David Cohen and Harold Levy’s Iridian Asset Management, which last disclosed ownership of 7.63 million shares of the company, worth more than $500 million on March 31.

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Fitbit Tumbles On Lowered Estimates

Next up is Fitbit Inc (NYSE:FIT), which is down by 2% in Monday trading, after Cleveland Research reportedly lowered its unit estimates for the company, citing increasing saturation of the fitness trackers market. Interestingly, Raymond James’ report, issued this morning, which assured that the firm left feeling confident on Fitbit’s future after meeting with its management team, could not help contain the tumble in the stock price. Overall, 30 funds in our database held more than 8% of Fitbit Inc (NYSE:FIT)’s float at the end of the first quarter. Among the most noteworthy stakes was the one held by Spencer M. Waxman’s Shannon River Fund Management, which initiated a new position in the company, comprising 2.45 million shares.

Mirati Plummets On Phase 1b Glesatinib Data

Shares of Mirati Therapeutics, Inc. (NASDAQ:MRTX) have plunged by some 40% on Monday, after the small-cap reported results from its Phase 1b study assessing its lead product, glesatinib, for the treatment of non-small cell lung cancer. According to the data, side effects looked excessive, leading the company to implement a spray-dried dispersion formulation of the tyrosine kinase inhibitor in the Phase 2 study. Mirati Therapeutics, Inc. (NASDAQ:MRTX) counted 14 hedge fund supporters in our database at the end of the first quarter. Notably, their combined stakes accounted for almost 40% of the company’s total shares outstanding. In fact, Julian and Felix Baker’s Baker Bros. Advisors alone held almost 17% of the float, or 3.26 million shares, by March 31.

Hercules Meets Hades, Files For Bankruptcy

Another decliner on Monday is Hercules Offshore, Inc. (NASDAQ:HERO), which has dropped by 7.8% after filing for Chapter 11 bankruptcy protection for the second time in just eight months. Unlike the previous occasion, Hercules plans to sell all of its assets to pay off investors and lenders, the company’s management said. According to the company, 99.7% of its first-lien lenders voted in favor of the bankruptcy plan. Among the funds that we track, 11 held long stakes in Hercules Offshore, Inc. (NASDAQ:HERO) at the end of the first quarter. Their stakes, which accounted for roughly 4.2% of the float, were not very large, though. Notable investors included George Soros’ Soros Fund Management, which held 1.4 million shares, and Mark T. Gallogly’s Centerbridge Partners, which owned the largest stake among institutional investors, containing 2.6 million shares.

Ariad Slips Despite Promising Data

Finally, there’s Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), whose stock has lost 1.2% on Monday afternoon, even though data presented at the American Society of Clinical Oncology this morning suggested that the company’s experimental drug for the treatment of non-small cell lung cancer (especially for patients who no longer benefit from Pfizer’s Xalkori) could work longer that other options available and could be better at treating tumors spreading to the brain. Among the 26 funds in our database long Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) on March 31, the largest stake was held by Alex Denner’s Sarissa Capital Management, which last disclosed ownership of 12.85 million shares, or about 6.7% of the total shares outstanding, by the end of the first quarter.

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