Why these 3 shares got smashed on the ASX in April

Savvy investors would have noticed that April was a month characterised by strong gains in the resources and energy sectors thanks to the rebound in prices for iron ore, gold and oil.

Many of the big name stocks such as BHP Billiton Limited (ASX: BHP)Fortescue Metals Group Limited (ASX: FMG)Newcrest Mining Limited (ASX: NCM) and Woodside Petroleum Limited (ASX: WPL) posted double-digit gains and this helped to drive the S&P/ASX 200 (Index: ^AXJO) (ASX:XJO) higher by around 3.3% during April.

Interestingly, it was the first month for quite a long time that companies from the resources sector didn’t feature in the list of shares under-performing the broader market.

Instead, a diverse range of companies struggled to keep up with the broader market during April, including:

Qantas Airways Limited (ASX: QAN)

Qantas shares lost more than 18% during April as the airline warned of softening domestic demand related to the upcoming Federal election and a drop in consumer confidence.

Qantas is not the only domestic carrier to suffer from reduced demand with Virgin Australia Holdings Ltd (ASX: VAH), just yesterday, announcing it would also be cutting its seat capacity for the same reasons cited by Qantas.

Compounding the situation for the airlines has been the rebound in the oil price after it appears to have bottomed out in the early part of this year. The massive decline witnessed in oil markets from the middle of 2014 has been a huge tailwind for the airlines and it wouldn’t be surprising to see sentiment in the sector turn negative if oil prices continue to climb.

Primary Health Care Limited (ASX: PRY)

Following a pretty disastrous 2015, shares of Primary Health Care started 2016 with a bang following speculation it could be the subject of a possible takeover. Two relatively obscure companies from Asia became new substantial shareholders of the company and this speculation resulted in the shares surging more than 80% in just a matter of weeks.

Since the start of April however, the shares have taken a breather falling by around 7%. Profit taking along with the realisation that an offer may not be forthcoming are the main reasons behind the falls, but an ASIC investigation into the company’s CEO, Peter Gregg, may also be concerning some investors. The investigation relates to Mr Gregg’s time when he was the CFO at Leighton Holdings (now Cimic Group Ltd (ASX: CIM)), although Primary Health Care had been aware of this investigation prior to his appointment and are confident Mr Gregg has not been involved in any wrong-doing.

Nine Entertainment Co Holdings Ltd (ASX: NEC)

Nine Entertainment shares fell sharply at the start of April following a negative trading update and failed to meaningfully recover any of those losses throughout the remainder of the month.

The company’s third quarter update was less than inspiring with its core television revenues down 11% from the same period last year. Subdued advertising markets were to blame along with softer-than-expected program ratings. One positive from the update was that Nine Entertainment was making progress on improving its operational efficiency with TV costs expected to be 4% lower.

The disappointing update from Nine resulted in the shares losing more than 27% over the month. The shares are now trading on a forecast price-to-earnings ratio of less than 10 and while this certainly looks cheap, the short-to-medium outlook remains quite challenging.

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Motley Fool contributor Christopher Georges has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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