It's said that if March comes in like a lion, it goes out like a lamb, and vice versa. For at least two of the stocks below, March looked like it was off to a roaring start, but now as it ends, it looks like all three being led to a slaughter.
NantHealth can't seem to escape allegations of fraud, which have dogged it for years and once delayed its IPO, which finally occurred last June. The latest charge of malfeasance is related to its chairman and CEO Dr. Patrick Soon-Shiong making a charitable donation to the University of Utah for the purpose of pursuing genomics analysis, but STAT News, which broke the story, reported that he structured the gift in such a way that it all but assured only NantHealth could receive the money. Fortune magazine quoted a tax expert as saying, "I think that this transaction was deliberately structured to attempt to disguise self-dealing."
Soon-Shiong has been accused of engaging in financial trickery before. Two years ago, two former employees said NantHealth was "engaged in a multitude of fraudulent activities," including using Soon-Shiong's charitable foundation to defraud the government by funneling money from the Centers for Medicare and Medicaid Services to make purchases of NantHealth equipment.
NantHealth has largely been on a downward slide since its IPO, but it has lost an additional 33% of its value in March. Needless to say, with numerous lawsuits being filed against it for fraud, investors would be wise to give this stock a wide berth.
Another recent IPO, this one last September, storage technology start-up Nutanix seemed to have a bright future in challenging the stalwarts of the industry like Cisco (NASDAQ:CSCO), EMC (NYSE: EMC), Hewlett-Packard Enterprise (NYSE:HPE), and NetApp, because it essentially combines servers, virtualization, and storage in one device, or what's called hyperconvergence. That would supposedly eliminate, for example, the need for a company to purchase EMC storage gear.
The launch of a tech IPO certainly got the market's attention, and though it was priced at $16 a share at the offering, it closed that day at $37 and went on to peak at almost $47 a stub. It's been a long way down since, and it has lost almost 38% of its value in March alone.
The problem is, competition is much more intense than believed, and though it reported earnings at the start of the month that exceeded analyst expectations, its guidance was below forecasts, and because of all of the chips it needs to source to create its all-in-one boxes, margins look like they'll be fairly compressed.
Hewlett-Packard Enterprise's purchase of Nutanix competitor Simplivity for $650 million will put extra pressure on the tech start-up, though there is some speculation that Cisco might then snap up Nutanix. But Cisco has had success with its own hyperconvergence HyperFlex and may not see the need for Nutanix, making its stock a risky play.
Last December, global oil giant Total (NYSE:TOT) bought a 23% stake in liquified natural gas specialist Tellurian, which is developing a $12 billion Louisiana LNG project called Driftwood. After Cheniere Energy (NYSEMKT:LNG) paved the way for LNG export projects, there has been a wave of interest in replicating that success. In fact, Tellurian was founded by Charif Souki, who was ousted from his position of CEO at Cheniere in 2015.
So, why the reversal of fortunes? Up until the start of March, Tellurian had doubled in value in 2017, but after crashing 36% this month, it's barely above where it started the year. It turns out, Tellurian spooked the market by filing its intent to make a secondary offering of its stock that would represent approximately 10% of its $2.15 billion market capitalization. The Driftwood project is also apparently being called into question.
Still, the prospects for the export market look especially bright, as the world will need about 20 million tons more per year of LNG, and Tellurian CEO Meg Gentle says, "The U.S. will be the cheapest source of new LNG, so we believe a lot of that 100 million tons will come from the U.S."
Diluting shareholders always drags down a stock, but Tellurian may still be one to eventually bounce back if its project comes to fruition.