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Is Calix Inc (CALX) A Good Stock To Buy?

Nina Todic

Is Calix Inc (NYSE:CALX) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Calix Inc (NYSE:CALX) shareholders have witnessed an increase in support from the world's most elite money managers recently. CALX was in 17 hedge funds' portfolios at the end of March. There were 14 hedge funds in our database with CALX holdings at the end of the previous quarter. Our calculations also showed that calx isn't among the 30 most popular stocks among hedge funds.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

D. E. Shaw

Let's view the key hedge fund action encompassing Calix Inc (NYSE:CALX).

How are hedge funds trading Calix Inc (NYSE:CALX)?

At Q1's end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CALX over the last 15 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with CALX Positions

When looking at the institutional investors followed by Insider Monkey, Steven Baughman's Divisar Capital has the most valuable position in Calix Inc (NYSE:CALX), worth close to $23.8 million, accounting for 7.8% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, managed by Jim Simons, which holds a $23 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers that are bullish contain Brett Hendrickson's Nokomis Capital, J. Daniel Plants's Voce Capital and D. E. Shaw's D E Shaw.

Now, key hedge funds were breaking ground themselves. Lynrock Lake, managed by Cynthia Paul, established the largest position in Calix Inc (NYSE:CALX). Lynrock Lake had $4.8 million invested in the company at the end of the quarter. Anand Parekh's Alyeska Investment Group also initiated a $3.2 million position during the quarter. The following funds were also among the new CALX investors: Will Graves's Boardman Bay Capital Management, Matthew Hulsizer's PEAK6 Capital Management, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Calix Inc (NYSE:CALX) but similarly valued. We will take a look at Diamond S Shipping Inc. (NYSE:DSSI), Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), Haynes International, Inc. (NASDAQ:HAYN), and Lydall, Inc. (NYSE:LDL). This group of stocks' market valuations resemble CALX's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DSSI,7,104295,7 ACHN,14,79338,-4 HAYN,8,49232,1 LDL,10,17129,1 Average,9.75,62499,1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $102 million in CALX's case. Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) is the most popular stock in this table. On the other hand Diamond S Shipping Inc. (NYSE:DSSI) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Calix Inc (NYSE:CALX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately CALX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CALX were disappointed as the stock returned -16.8% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.

Disclosure: None. This article was originally published at Insider Monkey.

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