Tuesday’s Movers and Shakers: Cummins, Dynavax & More

Although the broader market is relatively flat today, a number of stocks are more volatile then the main indexes.

With this in mind, let’s take a closer look at Cummins Inc. (NYSE:CMI), Hess Corp. (NYSE:HES), Dynavax Technologies Corporation (NASDAQ:DVAX), Barnes & Noble, Inc. (NYSE:BKS), and ExOne Co (NASDAQ:XONEand see why these stocks are trending today. In addition, we are going to assess the hedge fund sentiment towards them.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).

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Cummins Falls on Volkswagen Navistar Alliance

Traders sold Cummins Inc. (NYSE:CMI) to the tune of 6.2% after Volkswagen stuck a deal to buy a substantial stake in Navistar International Corp (NYSE:NAV) for $256 million. In addition to the cash proceeds, the alliance is expected to yield synergies of up to $500 million after five years. Given that Navistar was in relatively poor financial shape before the alliance, a strengthened Navistar is not good news for Cummins as it could potentially lead to lower market share/margins down the road. Natixis Global Asset Management‘s Harris Associates trimmed its position in Cummins Inc. (NYSE:CMI) by 11% 8.66 million shares during the second quarter.

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Hess Victim of Profit Taking, Soft Oil

Last weekend’s Russia-Saudi Arabia joint statement failed to make much of a difference in the energy sector as front month WTI futures are down 0.6% at around $44 per barrel. Given the poor price action in the commodity and Hess Corp. (NYSE:HES)‘s technical weakness, some traders evidently decided to take profits. Hess shares are down by 3.5% this afternoon as technical traders sell due to the stock falling below several key moving averages and fundamental investors don’t buy until WTI prices trend higher (at least in the short run). Of the around 750 funds we track, 37 were long Hess Corp. (NYSE:HES) at the end of the second quarter, down by two from the previous quarter.

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On the next page, we examine why traders are buying Dynavax Technologies Corporation, Barnes & Noble, and ExOne today.
Dynavax Clarifies

Dynavax Technologies Corporation (NASDAQ:DVAX) shares are 27% higher after the company provided a regulatory update on its lead product candidate HEPLISAV-B. Only a few days earlier, Dynavax shares fell sharply after the FDA cancelled a scheduled November 16 Vaccines and Related Biological Products Advisory Committee meeting over the drug’s BLA. According to the update, Dynavax said:

“During recent conversations between Dynavax and the FDA, the Agency communicated decisions to enable compliance with the current Prescription Drug User Fee Act (PDUFA) date of December 15, 2016… The FDA informed Dynavax that it plans to provide information requests related to remaining questions in the upcoming weeks. Dynavax is prepared to address these questions expeditiously in order to enable the FDA to complete its review as soon as possible.”

The company also added:

“The FDA also confirmed to Dynavax that it will review the overall immunogenicity data from HBV-23, the company’s most recent pivotal Phase 3 trial, to support the proposed indication for adults 18 years of age and over. However, the Agency has decided it will not review immunogenicity data related to sub-populations including results in individuals with diabetes because these data were not a direct response to the FDA’s February 22, 2013 Complete Response Letter and therefore fell outside of the review time allocated to a Class 2 resubmission. Thus, it was suggested the data should be submitted as a supplemental BLA following approval.”

The number of funds from our database with holdings in Dynavax Technologies Corporation (NASDAQ:DVAX) fell by six quarter-over-quarter to 23 at the end of June.

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Barron’s Bounce for Barnes & Noble 

Barnes & Noble, Inc. (NYSE:BKS) has surged by over 10% largely on the back of a favorable Barron’s article published over the weekend. In the column, writer Andrew Bary argues that the company’s earnings will likely increase over the next few years despite the perception that Barnes & Noble is being squeezed by Amazon.com, Inc. (NASDAQ:AMZN). Bary likes Barnes & Noble’s 5.3% yield and thinks shares have a 50% upside. A total of 21 funds tracked by us had a bullish position in Barnes & Noble, Inc. (NYSE:BKS) reporting period, unchanged from that of the previous quarter.

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ExOne Lifted By Improved Sentiment

ExOne Co (NASDAQ:XONE) shares are 5.6% in the green today due to General Electric Company (NYSE:GE)’s $1.4 billion collective purchase of two European 3D printing companies, Arcam AB and SLM Solutions Group AG. Because of GE’s purchase, sentiment in the sector has improved, and more traders are willing to hold ExOne Co (NASDAQ:XONE) in their portfolios. Shares of the company are up by over 34% year-to-date.

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Disclosure: none