What started out as a very bullish day didn’t end that way. With interest rate uncertainty still lingering, traders simply used yesterday’s and today’s early bullishness as an excuse to take profits while they could. By the time the closing bell rang, the S&P 500 was 1.39% lower, ending the session at 1942.04
And for owners of Men’s Wearhouse Inc (NYSE:MW), MannKind Corporation (NASDAQ:MNKD) and Cheniere Energy, Inc. (NYSEMKT:LNG), it was even worse. Each took on more than its fair share of water on Wednesday. Here’s why.
Cheniere Energy, Inc. (LNG)
Another bad day for crude and natural gas prices meant another bad day for gas and oil stocks. Wednesday’s favorite punching bag was Cheniere Energy, though LNG was likely sent a little deeper in the red for a company-specific reason.
Though they were rallying firmly three weeks ago, crude prices have struggled to rekindle that strength last week and this week so far. Oil prices fell 3.9% today, to a price near $44.30 per barrel.
That was enough to send LNG lower too, but Cheniere Energy shares also struggled to fend off another dose of bad news. What’s that? As it turns out, Kynikos Associates’ Jim Chanos has a sizable short trade — a bet that LNG shares will sink — on the stock. He categorized the company as a “looming disaster,” pointing out that demand for liquefied natural gas isn’t growing.
The idea seemed to resonate with traders, who sent LNG lower to the tune of 3.2%.
Men’s Wearhouse Inc (MW)
The men’s apparel retailer may have managed to top its second-quarter earnings estimates, but that just wasn’t enough. The market, more concerned about the revenue shortfall, sold the stock en masse. When all was said and done, MW finished the day down 12%.
In its second fiscal quarter, Men’s Wearhouse earned $1.07 per share on $920 million in revenue. While sales grew 15% on a year-over-year basis and profits topped the $1.05 per share of MW that analysts were expecting, sales missed estimates of $946.8 million.
The organization’s Jos. A. Bank division was a particular sore spot, with its same-store sales falling 9.4%. But, Jos. A. Bank is also the arm that will be undergoing the biggest overhaul. CEO Doug Ewert observed:
“Now that we have a full year under our belt, we have become even more convinced that changing the promotional messages to be clear and compelling without unusual quantity requirements, like buy one get three free offers, will broaden the appeal of the Joseph A. Bank brand.”
MannKind Corporation (MNKD)
Last but not least, MannKind shares took a hefty 10.1% hit on Wednesday after Piper Jaffray downgraded MNKD shares from “neutral” to “underweight.”
Jaffray analyst Joshua Schimmer noted of the inhalable insulin company:
“We believe MannKind has vastly over-estimated the commercial potential for the drug and are lowering our penetration estimates. Even our revised assumptions may be too aggressive so our discount rate is increasing from 10.5% to 11%. Our new PT is $1.50/share, which is roughly 60% down from current levels…”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
