You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund managers like Jeff Ubben, George Soros and Seth Klarman hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Caleres Inc (NYSE:CAL) investors should pay attention to a decrease in support from the world’s most elite money managers lately. Our calculations also showed that CAL isn’t among the 30 most popular stocks among hedge funds.
If you’d ask most traders, hedge funds are seen as slow, old financial vehicles of yesteryear. While there are over 8000 funds with their doors open at present, Our researchers look at the leaders of this club, around 750 funds. These investment experts preside over most of the smart money’s total capital, and by keeping an eye on their matchless stock picks, Insider Monkey has brought to light a few investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Let’s check out the fresh hedge fund action encompassing Caleres Inc (NYSE:CAL).
Hedge fund activity in Caleres Inc (NYSE:CAL)
At Q1’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in CAL a year ago. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Royce & Associates was the largest shareholder of Caleres Inc (NYSE:CAL), with a stake worth $21.7 million reported as of the end of March. Trailing Royce & Associates was Balyasny Asset Management, which amassed a stake valued at $13.7 million. AQR Capital Management, D E Shaw, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Because Caleres Inc (NYSE:CAL) has witnessed a decline in interest from the smart money, we can see that there is a sect of hedgies that slashed their positions entirely in the third quarter. Interestingly, Matthew Hulsizer’s PEAK6 Capital Management dumped the largest position of all the hedgies tracked by Insider Monkey, valued at close to $1 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund said goodbye to about $1 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Caleres Inc (NYSE:CAL) but similarly valued. These stocks are Pacific Drilling SA (NYSE:PACD), Washington Prime Group Inc. (NYSE:WPG), GasLog Partners LP (NYSE:GLOP), and Primoris Services Corp (NASDAQ:PRIM). All of these stocks’ market caps are closest to CAL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PACD | 6 | 496640 | 0 |
| WPG | 11 | 17826 | -2 |
| GLOP | 4 | 22589 | -3 |
| PRIM | 10 | 28869 | 1 |
| Average | 7.75 | 141481 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $141 million. That figure was $48 million in CAL’s case. Washington Prime Group Inc. (NYSE:WPG) is the most popular stock in this table. On the other hand GasLog Partners LP (NYSE:GLOP) is the least popular one with only 4 bullish hedge fund positions. Caleres Inc (NYSE:CAL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately CAL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CAL were disappointed as the stock returned -25.5% 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 so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
