Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Caleres Inc (NYSE:CAL).
Caleres Inc (NYSE:CAL) shareholders have witnessed an increase in enthusiasm from smart money in recent months. Caleres Inc (NYSE:CAL) was in 18 hedge funds’ portfolios at the end of March. The all time high for this statistic is 21. Our calculations also showed that CAL isn’t among the 30 most popular stocks among hedge funds (click for Q1 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. 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 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Keeping this in mind we’re going to go over the new hedge fund action encompassing Caleres Inc (NYSE:CAL).
Do Hedge Funds Think CAL Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CAL over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, D E Shaw was the largest shareholder of Caleres Inc (NYSE:CAL), with a stake worth $12 million reported as of the end of March. Trailing D E Shaw was Mountaineer Partners Management, which amassed a stake valued at $11.6 million. Arrowstreet Capital, Renaissance Technologies, and Six Columns Capital 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 Mountaineer Partners Management allocated the biggest weight to Caleres Inc (NYSE:CAL), around 8.11% of its 13F portfolio. Six Columns Capital is also relatively very bullish on the stock, designating 1.25 percent of its 13F equity portfolio to CAL.
As industrywide interest jumped, specific money managers were breaking ground themselves. Mountaineer Partners Management, managed by Mark Lee, assembled the most valuable position in Caleres Inc (NYSE:CAL). Mountaineer Partners Management had $11.6 million invested in the company at the end of the quarter. Brad Stephens’s Six Columns Capital also initiated a $7 million position during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Charles Davidson and Joseph Jacobs’s Wexford Capital, and Benjamin A. Smith’s Laurion Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Caleres Inc (NYSE:CAL) but similarly valued. These stocks are Trean Insurance Group, Inc. (NASDAQ:TIG), AxoGen, Inc. (NASDAQ:AXGN), CM Life Sciences, Inc. (NASDAQ:CMLF), Northfield Bancorp Inc (NASDAQ:NFBK), Collegium Pharmaceutical Inc (NASDAQ:COLL), Vanda Pharmaceuticals Inc. (NASDAQ:VNDA), and Adaptimmune Therapeutics plc (NASDAQ:ADAP). This group of stocks’ market caps are similar to CAL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TIG | 11 | 27832 | -3 |
| AXGN | 11 | 54726 | -3 |
| CMLF | 30 | 340530 | 15 |
| NFBK | 6 | 37059 | -3 |
| COLL | 15 | 211903 | -5 |
| VNDA | 18 | 207370 | -2 |
| ADAP | 15 | 343461 | -2 |
| Average | 15.1 | 174697 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $63 million in CAL’s case. CM Life Sciences, Inc. (NASDAQ:CMLF) is the most popular stock in this table. On the other hand Northfield Bancorp Inc (NASDAQ:NFBK) is the least popular one with only 6 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. Our overall hedge fund sentiment score for CAL is 58.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Hedge funds were also right about betting on CAL, though not to the same extent, as the stock returned 13.8% since Q1 (through July 23rd) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
