As Galleon Investors Flee, Some Tech Stocks Could Suffer

The spreading Galleon Group insider trading scandal has begun causing problems for some stocks in which the hedge fund operator has large holdings, the Wall Street Journal notes.

The Journal notes that investors have sought to withdraw $1.3 billion of the $3.7 billion in assets managed by the hedge fund group. The WSJ also noted that two large brokerage firms - Bank of America Merrill Lynch and Barclays - have told Galleon they will no longer trade with the firm.

According to StreetSight.net, at June 30 Galleon held more than 2% of the outstanding shares of eight different stocks:

• Applied Energetics (AERG), 8.6%


• Hutchinson Technology (HTCH), 6.3%


• Oncogenex Pharmaceuticals, (OGXI), 4.3%


• OSI Pharmaceuticals (OSIP), 2.9%


• Xyratex (XRTX), 2.6%


• Ikanos (IKAN), 2.3%


• Anadigics, (ANAD), 2.2%


• ArvinMeritor (ARM), 2.1%

Some of those stocks are showing signs of pressure; on Monday, AERG fell 16.3%, while IKAN fell 9.6%. In after-hours trade, HTCH fell 6.6%.

The 10 largest Galleon positions as of the same date:

• eBay


• Apple


• Google


• OSI Pharmaceuticals


• Cisco


• Bank of America


• J.P. Morgan Chase


• Dell


• Nvidia


• Intel