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Why These 6 Stocks Are Moving on Heavy Volume Today

The U.S stock market is trading lower today after Saudi Arabia’s oil minister said producers should lower their costs or simply “get out” of the petroleum industry. Oil has slid by 3.5%, contributing to the three major U.S indices being off by about 1% in afternoon trading. Against this backdrop, several stocks are making big moves in opposite directions today, on high trading volume. Those stocks are Avis Budget Group Inc. (NASDAQ:CAR), Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), Encana Corporation (USA) (NYSE:ECA), Dreamworks Animation Skg Inc (NASDAQ:DWA), and Papa John’s Int’l, Inc. (NASDAQ:PZZA), and in this article we’ll take a look at the latest developments that have sent these stocks higher and lower today and see what smart money investors think about them.

Hedge fund sentiment is an important metric for assessing long-term profitability. At Insider Monkey, we track over 700 hedge funds, whose quarterly 13F filings we analyze to 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 more details here).

Avis Budget Group Inc. (NASDAQ:CAR)’s stock is nearly 25% lower today on the back of its financial results for the fourth quarter and full 2015 year. For the quarter ended December 31, Avis Budget Group reported revenue of $1.90 billion, while its adjusted diluted earnings per share fell to $0.18, down from $0.23 a year earlier. While the profit (or lack thereof) met analysts’ estimates, Avis missed on revenue estimates by about $40 million. Far more damning in the eyes of investors was the company’s 2016 guidance of EPS in the range of $2.70 to $3.30, while the Street’s expectations were for 2016 EPS of $3.43.

During the fourth quarter, Avis Budget Group Inc. (NASDAQ:CAR) registered a decrease in popularity among the funds that we track, with 33 investors holding long positions at the end of December, down from 44 at the end of September. Among them, Karthik Sarma’s SRS Investment Management was the largest shareholder, reporting ownership of 9.5 million shares in its latest 13F filing.

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Next on our list are Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM), both of which are off by 4%, despite an experienced auto analyst saying that the future sales of trucks should help increase the stock prices of the American automakers. However, analysts at Credit Suisse downgraded their rating on Ford Motor Company to ‘Underperform’ from ‘Neutral’ and established a price target of $13 per share on it, representing marginal upside, while General Motors Company (NYSE:GM) has the felt the sting from an analyst call as well, with Morgan Stanley having reiterated an ‘Underweight’ rating and a price target of $26, which suggests downside potential of over 10%.

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Hedge funds were slightly optimistic on Ford Motor Company (NYSE:F) in the fourth quarter, with 39 funds long the stock at the end of the quarter, up from 38 funds at the close of the third quarter. Heading in the opposite direction was GM, which has far more investors than Ford as of the end of December among those that we track, at 84, but which lost a new of four funds during the quarter. Warren Buffett’s Berkshire Hathaway was the top GM shareholder in our system, with 50.00 million shares at the end of December.

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