Should You Avoid Calix Inc (CALX)?

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Calix Inc (NYSE:CALX) was in 13 hedge funds’ portfolios at the end of September. CALX shareholders have witnessed a decrease in support from the world’s most successful money managers in recent months. There were 15 hedge funds in our database with CALX holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Ares Commercial Real Estate Corp (NYSE:ACRE), Barrett Business Services, Inc. (NASDAQ:BBSI), and Clifton Savings Bancorp, Inc. (NASDAQ:CSBK) to gather more data points.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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How are hedge funds trading Calix Inc (NYSE:CALX)?

At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a 13% drop from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CALX over the last 5 quarters, which has mostly trended down. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Alyeska Investment Group, led by Anand Parekh, holds the most valuable position in Calix Inc (NYSE:CALX). Alyeska Investment Group has a $19.5 million position in the stock. The second most bullish fund manager is Nokomis Capital, led by Brett Hendrickson, which holds a $17.8 million position; 3.8% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish contain Renaissance Technologies, one of the largest hedge funds in the world, David E. Shaw’s D E Shaw, and J. Daniel Plants’ Voce Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.