Is CALX Stock A Buy or Sell?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Calix Inc (NYSE:CALX).

Is CALX stock a buy? The smart money was becoming hopeful. The number of long hedge fund positions increased by 1 lately. Calix Inc (NYSE:CALX) was in 25 hedge funds’ portfolios at the end of December. The all time high for this statistic is 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CALX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Roger Ibbotson of Zebra Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. Now we’re going to take a look at the new hedge fund action encompassing Calix Inc (NYSE:CALX).

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

At the end of the fourth quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in CALX a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the largest position in Calix Inc (NYSE:CALX). Renaissance Technologies has a $88.4 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Driehaus Capital, managed by Richard Driehaus, which holds a $44.9 million position; 0.7% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism encompass John Overdeck and David Siegel’s Two Sigma Advisors, J. Daniel Plants’s Voce Capital and Steven Baughman’s Divisar Capital. In terms of the portfolio weights assigned to each position Voce Capital allocated the biggest weight to Calix Inc (NYSE:CALX), around 9.56% of its 13F portfolio. Divisar Capital is also relatively very bullish on the stock, designating 5.41 percent of its 13F equity portfolio to CALX.

As aggregate interest increased, some big names have jumped into Calix Inc (NYSE:CALX) headfirst. Discovery Capital Management, managed by Rob Citrone, established the most valuable position in Calix Inc (NYSE:CALX). Discovery Capital Management had $3.6 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.8 million position during the quarter. The other funds with brand new CALX positions are Brad Farber’s Atika Capital, Roger Ibbotson’s Zebra Capital Management, and Joel Greenblatt’s Gotham Asset Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Calix Inc (NYSE:CALX) but similarly valued. We will take a look at Retail Properties of America Inc (NYSE:RPAI), Cal-Maine Foods Inc (NASDAQ:CALM), Navient Corp (NASDAQ:NAVI), HudBay Minerals Inc (NYSE:HBM), eHealth, Inc. (NASDAQ:EHTH), Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), and Mersana Therapeutics, Inc. (NASDAQ:MRSN). This group of stocks’ market valuations resemble CALX’s market valuation.

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As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $318 million. That figure was $255 million in CALX’s case. Mersana Therapeutics, Inc. (NASDAQ:MRSN) is the most popular stock in this table. On the other hand Retail Properties of America Inc (NYSE:RPAI) is the least popular one with only 6 bullish hedge fund positions. Calix Inc (NYSE:CALX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CALX is 75.6. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on CALX as the stock returned 40.9% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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