After DA Davidson initiated coverage of Cal-Maine Foods Inc (NASDAQ:CALM) with a “Buy” rating and a price target of $65 per share in a research note on Friday, the stock spiked as high as $56.42 per share to eventually close at $54.80 per share or 1.88% higher than its Thursday closing price of $53.79 per share. The price target set by DA Davidson represents an 18.61% upside to the stock. From the start of the year, the stock has climbed 40.40%, while over the last one-year period, the stock has had even more momentum, growing by 47.69%. The company, which produces and distributes shell eggs, also received an upgrade from Stephens & Co. on May 18, with that firm upgrading the stock to an ‘Overweight’ rating from an ‘Equal Weight’ rating . The firm’s price target on Cal-Maine Foods Inc is also $65 per share. On May 11, Sidoti boosted its price target on the stock to $67 per share from $51 per share.
Despite these bullish outlooks there were fewer hedge funds among those tracked by Insider Monkey which had long positions in Cal-Maine Foods Inc by the end of the first quarter. At the close of the first three months of the year, a total of 24 of the hedge funds we track held long positions in this stock, down 4% from one quarter earlier. It should be noted, nonetheless, that those who were long in the stock boosted the value of their collective holdings to $224.47 million from $205.44 million at the end of the fourth quarter of 2014, a change of 9.27%, which is significant considering the stock was flat during the period.
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Insider Monkey tracks insider purchases and sales of shares as well to infer whether top management are betting for or potentially against their own company’s stock. In the case of Cal-Maine Foods Inc (NASDAQ:CALM), Director James Poole bought 1,000 shares of the company on April 9. Chief Financial Officer Timothy Dawson, however, sold 6,000 shares of the company in two transactions towards the end of April. Overall, insider sentiment in the stock is slightly positive because of the significant weight we attach to insider purchases.
Keeping this in mind, let’s take a peek at the recent hedge fund action surrounding Cal-Maine Foods Inc (NASDAQ:CALM).
What have hedge funds been doing with Cal-Maine Foods Inc (NASDAQ:CALM)?
Of the funds tracked by Insider Monkey, Chuck Royce‘s Royce & Associates had the most valuable position in Cal-Maine Foods Inc (NASDAQ:CALM), worth close to $126 million, consisting of about 3.23 million shares, and accounting for 0.5% of its total 13F portfolio. The second-largest stake is held by Renaissance Technologies, led by Jim Simons, holding a $47.9 million position or about 1.23 million in shares; 0.1% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish contain Glenn Russell Dubin’s Highbridge Capital Management, Ken Griffin’s Citadel Investment Group, and Eric Sprott’s Sprott Asset Management.
Due to the fact that Cal-Maine Foods Inc (NASDAQ:CALM) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedgies that elected to cut their entire stakes at the end of the first quarter. At the top of the heap was Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, which dumped the biggest position among the “upper crust” of funds monitored by Insider Monkey, selling 152,509 shares worth about $6 million. Ray Carroll’s fund, Breton Hill Capital, also said goodbye to its 43,746-share position, worth about $1.7 million.
As we can see, there were fewer hedge funds who were long on Cal-Maine Foods Inc by the end of the first quarter. Still, the substantial increase in the value of holdings means that those who were still long on the stock generally increased the number of shares they held. Insider sentiment was also positive. These, along with the bullish views of analysts on the stock leads us to recommend Cal-Maine Foods Inc (NASDAQ:CALM) as a stock to buy.
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