Why These Five Stocks Are on the Move Today

It has been a quiet day on Wall Street so far as all three indexes are close to flat as traders await the latest earnings reports from major companies.

Among the stocks showing more volatility than the broader indexes are CDK Global Inc (NASDAQ:CDK), Sprint Corp (NYSE:S), 3D Systems Corporation (NYSE:DDD), Stratasys, Ltd. (NASDAQ:SSYS), and Netflix, Inc. (NASDAQ:NFLX). Let’s take a closer look at the latest developments surrounding the companies in question and see what the investors from our database think about them.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 700 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

Twin Design / Shutterstock.com

CDK Global Issues Preliminary Results

CDK Global Inc (NASDAQ:CDK) shares are 1.5% in the green today after the company reported preliminary fourth quarter earnings of $0.49 per share, versus guidance of $0.45 per share. Adjusted EBITDA rose 40%, exceeding the forecasted increase of 33%-38%. The strong results were in part due to the management reducing the number of software versions by 20% and the company having solid momentum in other transformation work streams. Management has also accelerated the capital return plan, with a recent commitment to return $1 billion to shareholders by December 2016. Paul Singer’s Elliott Management reported a stake containing over slightly over 8 million shares of CDK Global Inc (NASDAQ:CDK) at the end of March.

Sprint Falls on Parent Aquisition

Sprint Corp (NYSE:S) has retreated by 7.2% after majority owner SoftBank announced the acquisition of ARM Holdings plc (ADR) (NASDAQ:ARMH) for around $32 billion. Although the acquisition doesn’t fundamentally harm Sprint, the M&A deal means that SoftBank won’t have as much to invest in Sprint’s infrastructure as it did before. The U.S. telecom business is highly competitive, and Sprint isn’t exactly in the lead right now in terms of innovation or scale. The number of investors from our database with holdings in Sprint Corp (NYSE:S) rose by three quarter-over-quarter to 20 at the end of March.

On the next page, we take a closer look at 3D Systems Corporation, Stratasys, and Netflix.

3D Stocks Drop on Downgrades

3D printer stocks 3D Systems Corporation (NYSE:DDD) and Stratasys, Ltd. (NASDAQ:SSYS) are 9% and 10% lower after analysts at Piper Jaffray downgraded both stocks. Specifically, analysts at Piper downgraded Stratasys to ‘Neutral’ from ‘Overweight’ and cut their price target to $24 from $32 per share, while 3D Systems was downgraded to ‘Underweight’ from ‘Neutral’ and cut their price target to $10.25 per share from the previous $12 per share. The analysts cite channel checks that show a softening demand for 3D printers for the second quarter as the reason for the downgrades. Among the funds we track, 12 funds amassed 3.90% of 3D Systems Corporation (NYSE:DDD)’s float and 18 top funds held 10.30% of Stratasys, Ltd. (NASDAQ:SSYS)’s outstanding stock at the end of the first quarter.

Netflix Grabs Star Trek TV International Rights 

Netflix, Inc. (NASDAQ:NFLX) is in the spotlight today after the streaming giant signed a licensing agreement to be the exclusive home of the new Star Trek TV series for 188 countries outside of Canada and the United States. Star Trek is a major franchise with millions of dedicated fans, and the arrangement could help boost Netflix’s international growth numbers beginning January of 2017. A total of 64 funds followed by us had a bullish position in Netflix, Inc. (NASDAQ:NFLX) at the end of the first quarter, unchanged over the quarter.

Disclosure: none