Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Calix Inc (NYSE:CALX) based on that data.
Hedge fund interest in Calix Inc (NYSE:CALX) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Health Insurance Innovations Inc (NASDAQ:HIIQ), DURECT Corporation (NASDAQ:DRRX), and Ladenburg Thalmann Financial Services (NYSEAMEX:LTS) to gather more data points. Our calculations also showed that CALX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26073" align="alignnone" width="600"] Jim Simons of Renaissance Technologies[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's view the key hedge fund action regarding Calix Inc (NYSE:CALX).
What does smart money think about Calix Inc (NYSE:CALX)?
Heading into the fourth quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. On the other hand, there were a total of 12 hedge funds with a bullish position in CALX a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Divisar Capital was the largest shareholder of Calix Inc (NYSE:CALX), with a stake worth $22.1 million reported as of the end of September. Trailing Divisar Capital was Renaissance Technologies, which amassed a stake valued at $17.9 million. Voce Capital, D E Shaw, and Lynrock Lake were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Divisar Capital allocated the biggest weight to Calix Inc (NYSE:CALX), around 7.33% of its 13F portfolio. North Run Capital is also relatively very bullish on the stock, setting aside 5.16 percent of its 13F equity portfolio to CALX.
Judging by the fact that Calix Inc (NYSE:CALX) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there were a few fund managers that elected to cut their entire stakes last quarter. At the top of the heap, Brett Hendrickson's Nokomis Capital dumped the largest investment of all the hedgies tracked by Insider Monkey, worth close to $14.8 million in stock. Peter Muller's fund, PDT Partners, also cut its stock, about $0.3 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks similar to Calix Inc (NYSE:CALX). We will take a look at Health Insurance Innovations Inc (NASDAQ:HIIQ), DURECT Corporation (NASDAQ:DRRX), Ladenburg Thalmann Financial Services (NYSEAMEX:LTS), and Clarus Corporation (NASDAQ:CLAR). This group of stocks' market caps resemble CALX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HIIQ,15,90739,-4 DRRX,9,44901,4 LTS,6,2560,1 CLAR,12,47803,-2 Average,10.5,46501,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $83 million in CALX's case. Health Insurance Innovations Inc (NASDAQ:HIIQ) is the most popular stock in this table. On the other hand Ladenburg Thalmann Financial Services (NYSEAMEX:LTS) is the least popular one with only 6 bullish hedge fund positions. Calix Inc (NYSE:CALX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on CALX as the stock returned 21.3% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.