Hedge Funds Are Warming Up To Callaway Golf Company (ELY)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Callaway Golf Company (NYSE:ELY)?

Is Callaway Golf Company (NYSE:ELY) a healthy stock for your portfolio? Investors who are in the know are becoming more confident. The number of long hedge fund bets went up by 3 in recent months. Our calculations also showed that ELY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). ELY was in 23 hedge funds’ portfolios at the end of the first quarter of 2020. There were 20 hedge funds in our database with ELY holdings at the end of the previous quarter.

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

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Barry Rosenstein of JANA Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a gander at the latest hedge fund action encompassing Callaway Golf Company (NYSE:ELY).

How have hedgies been trading Callaway Golf Company (NYSE:ELY)?

At the end of the first quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ELY over the last 18 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

More specifically, JANA Partners was the largest shareholder of Callaway Golf Company (NYSE:ELY), with a stake worth $66.4 million reported as of the end of September. Trailing JANA Partners was Point72 Asset Management, which amassed a stake valued at $12.4 million. Millennium Management, 13D Management, and Citadel Investment Group 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 JANA Partners allocated the biggest weight to Callaway Golf Company (NYSE:ELY), around 8.46% of its 13F portfolio. Empirical Capital Partners is also relatively very bullish on the stock, designating 5.61 percent of its 13F equity portfolio to ELY.

Now, some big names have jumped into Callaway Golf Company (NYSE:ELY) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the largest position in Callaway Golf Company (NYSE:ELY). Arrowstreet Capital had $1.1 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $1.1 million position during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, Prem Watsa’s Fairfax Financial Holdings, and Jinghua Yan’s TwinBeech Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Callaway Golf Company (NYSE:ELY) but similarly valued. We will take a look at OceanFirst Financial Corp. (NASDAQ:OCFC), WESCO International, Inc. (NYSE:WCC), US Ecology Inc. (NASDAQ:ECOL), and Sapiens International Corporation N.V. (NASDAQ:SPNS). This group of stocks’ market caps resemble ELY’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $81 million. That figure was $120 million in ELY’s case. WESCO International, Inc. (NYSE:WCC) is the most popular stock in this table. On the other hand OceanFirst Financial Corp. (NASDAQ:OCFC) is the least popular one with only 9 bullish hedge fund positions. Callaway Golf Company (NYSE:ELY) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on ELY as the stock returned 62.3% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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