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Is CLS A Good Stock To Buy Now?

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Reymerlyn Martin
·5 min read
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We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of Celestica Inc. (NYSE:CLS) based on that data.

Is CLS a good stock to buy now? Celestica Inc. (NYSE:CLS) has experienced an increase in activity from the world's largest hedge funds recently. Celestica Inc. (NYSE:CLS) was in 15 hedge funds' portfolios at the end of September. The all time high for this statistic is 18. There were 11 hedge funds in our database with CLS holdings at the end of June. Our calculations also showed that CLS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are numerous indicators stock traders have at their disposal to value stocks. Two of the most innovative indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top investment managers can outpace the market by a solid margin (see the details here).

GOTHAM ASSET MANAGEMENT
GOTHAM ASSET MANAGEMENT

Joel Greenblatt of Gotham Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let's review the fresh hedge fund action surrounding Celestica Inc. (NYSE:CLS).

Do Hedge Funds Think CLS Is A Good Stock To Buy Now?

At the end of September, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 36% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in CLS over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Pzena Investment Management was the largest shareholder of Celestica Inc. (NYSE:CLS), with a stake worth $47.4 million reported as of the end of September. Trailing Pzena Investment Management was Arrowstreet Capital, which amassed a stake valued at $17.5 million. D E Shaw, Citadel Investment Group, and Nishkama Capital 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 Nishkama Capital allocated the biggest weight to Celestica Inc. (NYSE:CLS), around 1.27% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, earmarking 0.54 percent of its 13F equity portfolio to CLS.

As aggregate interest increased, key hedge funds have jumped into Celestica Inc. (NYSE:CLS) headfirst. Nishkama Capital, managed by Ravee Mehta, established the largest position in Celestica Inc. (NYSE:CLS). Nishkama Capital had $2.8 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $2.6 million position during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management, Paul Marshall and Ian Wace's Marshall Wace LLP, and Joel Greenblatt's Gotham Asset Management.

Let's now take a look at hedge fund activity in other stocks similar to Celestica Inc. (NYSE:CLS). We will take a look at Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), istar Inc (NYSE:STAR), Employers Holdings, Inc. (NYSE:EIG), DHT Holdings Inc (NYSE:DHT), Cardtronics plc (NASDAQ:CATM), Dyne Therapeutics, Inc. (NASDAQ:DYN), and Denbury Inc. (NYSE:DEN). This group of stocks' market caps are closest to CLS's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMPH,8,16840,-1 STAR,14,102800,1 EIG,12,52197,0 DHT,24,129282,6a CATM,15,247410,-6 DYN,23,219240,23 DEN,9,298169,9 Average,15,152277,4.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $152 million. That figure was $88 million in CLS's case. DHT Holdings Inc (NYSE:DHT) is the most popular stock in this table. On the other hand Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) is the least popular one with only 8 bullish hedge fund positions. Celestica Inc. (NYSE:CLS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CLS is 55.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on CLS as the stock returned 15.9% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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

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