Sunedison Inc, Netflix, Inc. Swing Wildly Amid Investor Updates

Sunedison Inc (SUNE) and Netflix, Inc. (NFLX) are moving in opposite directions, after several major investment firms disclosed changes to their portfolios

by Alex Eppstein

Published on Nov 17, 2015 at 2:34 PM
Updated on Jun 24, 2020 at 10:16 AM

A number of stocks are making notable moves amid recently released regulatory filings, showing the activity of prominent investment firms during the third quarter. Two names feeling the effects are solar concern Sunedison Inc (NYSE:SUNE) and streaming content provider Netflix, Inc. (NASDAQ:NFLX).

SUNE has plunged 27% to trade at $3.33, and is fresh off a nearly three-year low of $3.24, after it came to light that both Omega Advisors and Greenlight Capital drastically reduced their stakes in the company -- by 37.1% and 25.1%, respectively. In fact, the stock is currently the biggest decliner on the Big Board.

With the shares on the short-sale restricted list, options volume has taken off, running at quadruple the expected afternoon rate. It looks like at least some traders may be keeping the faith, though, based on buy-to-open activity at the November 4 call -- confirmed by the International Securities Exchange (ISE). In short, these speculators are relying on SUNE to rebound above $4 by Friday's closing bell, when front-month options expire.

These aren't the only traders taking a glass-half-full approach toward the stock. SUNE's 50-day ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.78 ranks in the 87th percentile of its 12-month range -- though, with 33% of the equity's float sold short, some long calls may have been initiated by short sellers hedging.

It's more of the same among the brokerage crowd. Ten analysts currently maintain "buy" or better ratings on Sunedison Inc, more than doubling the four "holds" on the books. From a contrarian perspective, an unwinding of the extreme optimism observed among traders and brokerage firms alike could yield an outsized move to the downside.

On the other side of the two-edged sword of hedge fund investment shake-ups is NFLX. The shares have shot 4.8% higher to trade at $166.70, amid news that Soros Fund Management took a more than 317,000-share stake in the company last quarter. Sharp gains are nothing new for this stock, which has surged nearly 140% on a year-to-date basis.

All the while, NFLX calls are being exchanged at double the expected afternoon clip. In the driver's seat are the November 115 and 120 calls, with a total of over 28,000 contracts on the tape. Call buyers are essentially banking on the shares to continue their ascent through front-month expiration at week's end.

This is business as usual for Netflix, Inc. The stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.71 outstrips 99% of comparable readings from the past year, revealing a stronger-than-usual bias for bullish bets over bearish. Echoing this optimism, 17 of 28 analysts have doled out "buy" or better recommendations on NFLX.

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