Institutions Are Selling These 4 Losing Stocks Under $5

Low priced stocks are attractive to investors because small price changes can lead to high percentage changes, both positive and negative.

We want to provide some “red flag” alerts to investors looking at low priced stocks, by suggesting they look at the trading activities of “smart money” investors and recent price trends before making any decisions.

The list of stocks below meet the following criteria:

- share price between $1-$5
- losing streaks (see below for more details)
- net institutional selling in the current quarter at significant levels.

We measure ”losing streaks” using the number of days in which the stock beat the S&P 500 over the last month and the number of days in which it underperformed the S&P 500. We then compared the longest winning streak in days over the last month to the longest losing streak, and found those stocks with the lowest ratios, indicating these stocks have been underperforming the S&P 500.

Institutional investors are also known as “big money” investors. They manage large pools of money such as mutual funds and hedge funds. When they invest in stocks, they can invest hundreds of thousands of dollars or more at one time. These transactions, called “block trades,” can have a significant effect on share prices. Because institutional investors handle such large amounts of money, it is easy enough to assume that the big money managers know more than the average investor.

Business Section: Investing Ideas

Here’s our final list. Do you think these stocks deserve their negative attentions?

Interactive Chart: Use the Compar-O-Matic to compare market caps for the stocks mentioned below:

1. MEMC Electronic Materials Inc. (WFR, Earnings, Analysts, Financials): Engages in the development, manufacture, and sale of silicon wafers for the semiconductor industry worldwide. Market cap at $565.75M, most recent closing price at $2.45. Net institutional sales in the current quarter at -19.2M shares, which represents about 10.72% of the company’s float of 179.07M shares. The stock’s average daily alpha vs. the S&P500 index stands at -0.99% (measured close to close, over the last month). During this period, the longest losing streak lasted 9 days (i.e. the stock’s daily returns underperformed the S&P 500 for 9 consecutive days). The longest winning streak lasted 3 days (i.e. a win streak / losing streak ratio of 0.33).

2. Thompson Creek Metals Company Inc. (TC, Earnings, Analysts, Financials): Engages in mining, milling, processing, and marketing molybdenum products in the United States and Canada. Market cap at $467.38M, most recent closing price at $2.77. Net institutional sales in the current quarter at -7.8M shares, which represents about 5.37% of the company’s float of 145.18M shares. The stock’s average daily alpha vs. the S&P500 index stands at -0.84% (measured close to close, over the last month). During this period, the longest losing streak lasted 8 days (i.e. the stock’s daily returns underperformed the S&P 500 for 8 consecutive days). The longest winning streak lasted 3 days (i.e. a win streak / losing streak ratio of 0.38).

3. Atmel Corporation (ATML, Earnings, Analysts, Financials): Designs, develops, manufactures, and markets a range of semiconductor integrated circuit (IC) products. Market cap at $2.03B, most recent closing price at $4.62. Net institutional sales in the current quarter at -21.3M shares, which represents about 5.06% of the company’s float of 420.97M shares. The stock’s average daily alpha vs. the S&P500 index stands at -1.43% (measured close to close, over the last month). During this period, the longest losing streak lasted 5 days (i.e. the stock’s daily returns underperformed the S&P 500 for 5 consecutive days). The longest winning streak lasted 2 days (i.e. a win streak / losing streak ratio of 0.4).

4. PMC-Sierra Inc. (PMCS, Earnings, Analysts, Financials): Engages in the design, development, marketing, and support of semiconductor solutions for the enterprise infrastructure and communications infrastructure markets. Market cap at $1.02B, most recent closing price at $4.87. Net institutional sales in the current quarter at -20.7M shares, which represents about 11.2% of the company’s float of 184.79M shares. The stock’s average daily alpha vs. the S&P500 index stands at -0.98% (measured close to close, over the last month). During this period, the longest losing streak lasted 6 days (i.e. the stock’s daily returns underperformed the S&P 500 for 6 consecutive days). The longest winning streak lasted 1 day (i.e. a win streak / losing streak ratio of 0.17).

Price data sourced from Yahoo! Finance, institutional data sourced from Fidelity, all other data sourced from Finviz. 

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Analyze These Ideas: Getting Started

• Read descriptions for all companies mentioned
• Access a performance overview for all stocks in the list
• Compare analyst ratings for the companies mentioned
• Compare analyst ratings to annual returns for stocks mentioned
• Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)

Dig Deeper: Access Company Snapshots, Charts, Filings

• MEMC Electronic Materials Inc. (WFR, Chart, Download SEC Filings)
• Thompson Creek Metals Company Inc. (TC, Chart, Download SEC Filings)
• Atmel Corporation (ATML, Chart, Download SEC Filings)
• PMC-Sierra Inc. (PMCS, Chart, Download SEC Filings)

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