Is CalAmp Corp. (NASDAQ:CAMP) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
CalAmp Corp. (NASDAQ:CAMP) was in 10 hedge funds' portfolios at the end of September. CAMP investors should pay attention to a decrease in activity from the world's largest hedge funds in recent months. There were 16 hedge funds in our database with CAMP holdings at the end of the previous quarter. Our calculations also showed that CAMP 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.
If you'd ask most market participants, hedge funds are seen as slow, old investment vehicles of the past. While there are greater than 8000 funds with their doors open today, Our experts look at the aristocrats of this club, approximately 750 funds. These hedge fund managers direct most of the smart money's total capital, and by shadowing their unrivaled equity investments, Insider Monkey has uncovered various investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[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. We're going to take a look at the latest hedge fund action regarding CalAmp Corp. (NASDAQ:CAMP).
What does smart money think about CalAmp Corp. (NASDAQ:CAMP)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CAMP over the last 17 quarters. With hedge funds' sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Lynrock Lake was the largest shareholder of CalAmp Corp. (NASDAQ:CAMP), with a stake worth $72.6 million reported as of the end of September. Trailing Lynrock Lake was Renaissance Technologies, which amassed a stake valued at $12.7 million. Royce & Associates, Marshall Wace, and D E Shaw 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 Lynrock Lake allocated the biggest weight to CalAmp Corp. (NASDAQ:CAMP), around 9.28% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, setting aside 0.1 percent of its 13F equity portfolio to CAMP.
Because CalAmp Corp. (NASDAQ:CAMP) has witnessed falling interest from the smart money, logic holds that there exists a select few funds who sold off their full holdings in the third quarter. Interestingly, Jim Roumell's Roumell Asset Management said goodbye to the biggest investment of the 750 funds tracked by Insider Monkey, comprising an estimated $1.6 million in stock, and Paul Hondros's AlphaOne Capital Partners was right behind this move, as the fund said goodbye to about $1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds in the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as CalAmp Corp. (NASDAQ:CAMP) but similarly valued. These stocks are Sierra Wireless, Inc. (NASDAQ:SWIR), Regalwood Global Energy Ltd. (NYSE:RWGE), Capital Southwest Corporation (NASDAQ:CSWC), and Oppenheimer Holdings Inc. (NYSE:OPY). This group of stocks' market valuations are closest to CAMP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SWIR,12,63843,2 RWGE,14,128064,0 CSWC,9,40496,-1 OPY,9,33323,0 Average,11,66432,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $128 million in CAMP's case. Regalwood Global Energy Ltd. (NYSE:RWGE) is the most popular stock in this table. On the other hand Capital Southwest Corporation (NASDAQ:CSWC) is the least popular one with only 9 bullish hedge fund positions. CalAmp Corp. (NASDAQ:CAMP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately CAMP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CAMP investors were disappointed as the stock returned -8.9% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.