3 Stocks Hedge Funds Are Dumping Right Now
Knowing when to buy and sell a stock can be a tricky process, but it’s one that all investors have to master if they want to succeed. If you’re still holding onto these three toxic stocks, it may be time to get out of Dodge.
1. Zoetis Inc. (ZTS)
Zoetis is a global animal health company, producing vaccinations and medicine for livestock and pets. Based in Florham Park, NJ, the company was once a subsidiary of Pfzier (PFE), but is now a completely independent company.
Zoetis does well in the industry, and that’s because it has a fragmented customer base, which gives the company more pricing power.
Citadel Investment Group recently sold its entire stake in the company, which equated to 3.3 million shares with a value of just over $145 million at the end of 2015. Marshal Wave Llp also sold 404,538 shares. At the end of the first quarter, the hedge fund had 8.99 million shares.
Why should you sell the stock?
For the medium term, emerging market sales will create a headwind for Zoetis’ total margins.
2. Allergen (AGN)
It’s no surprise that hedge funds are dumping Allergan stock. Most headed for the exits when news broke of the failed merger with Pfizer and share prices plummeted.
But despite many of the top money managers selling their shares, Allergan still boasts a solid portfolio of drugs, and many are generating double-digit growth. That trend shows no sign of stopping anytime soon, and the company is set to launch new products in the near future.
Allergan’s management also committed to a $10 billion share buyback program once its deal with Teva Pharmaceutical Industries is completed.
3. AT&T (T)
It seems that Warren Buffet is no longer keen on AT&T. His Berkshire Hathaway (BRK-B) sold its stake in the company in a not-so-surprising move.
The telecom industry is fiercely competitive, and advancements in the industry are quickly reducing the costs of communication. These two factors are putting pressure on profitability and pricing in the industry.
AT&T’s acquisition of DirectTV (part of a $49 billion deal) made the company a serious player in the pay TV industry, but the cord-cutting revolution is the biggest threat to pay TV. AT&T may find itself on the losing end of this battle if it cannot adapt to technological change.
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