At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
Caleres Inc (NYSE:CAL) was in 12 hedge funds’ portfolios at the end of December. CAL shareholders have witnessed a decrease in hedge fund sentiment recently. There were 17 hedge funds in our database with CAL holdings at the end of the previous quarter. Our calculations also showed that CAL isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a look at the key hedge fund action surrounding Caleres Inc (NYSE:CAL).
What does the smart money think about Caleres Inc (NYSE:CAL)?
At the end of the fourth quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards CAL over the last 14 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in Caleres Inc (NYSE:CAL), which was worth $20.2 million at the end of the fourth quarter. On the second spot was AQR Capital Management which amassed $6.3 million worth of shares. Moreover, Balyasny Asset Management, PEAK6 Capital Management, and Citadel Investment Group were also bullish on Caleres Inc (NYSE:CAL), allocating a large percentage of their portfolios to this stock.
Because Caleres Inc (NYSE:CAL) has faced bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedge funds who sold off their positions entirely by the end of the third quarter. Interestingly, Lee Ainslie’s Maverick Capital dumped the biggest investment of the 700 funds followed by Insider Monkey, worth close to $2.6 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund sold off about $2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 5 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Caleres Inc (NYSE:CAL). We will take a look at Oceaneering International, Inc. (NYSE:OII), Getty Realty Corp. (NYSE:GTY), Masonite International Corp (NYSE:DOOR), and WSFS Financial Corporation (NASDAQ:WSFS). This group of stocks’ market values are similar to CAL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OII | 16 | 85020 | 4 |
| GTY | 8 | 82062 | 0 |
| DOOR | 19 | 215680 | -2 |
| WSFS | 12 | 115665 | 2 |
| Average | 13.75 | 124607 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $32 million in CAL’s case. Masonite International Corp (NYSE:DOOR) is the most popular stock in this table. On the other hand Getty Realty Corp. (NYSE:GTY) is the least popular one with only 8 bullish hedge fund positions. Caleres Inc (NYSE:CAL) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately CAL wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); CAL investors were disappointed as the stock returned -2.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
