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Do Hedge Funds Love CalAmp Corp. (CAMP)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtCalAmp Corp. (NASDAQ:CAMP) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is CalAmp Corp. (NASDAQ:CAMP) a safe stock to buy now? Investors who are in the know were becoming more confident. The number of bullish hedge fund positions went up by 3 in recent months. Our calculations also showed that CAMP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 58 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.

RENAISSANCE TECHNOLOGIES

Jim Simons Founder of Renaissance Technologies

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s check out the fresh hedge fund action regarding CalAmp Corp. (NASDAQ:CAMP).

What does smart money think about CalAmp Corp. (NASDAQ:CAMP)?

Heading into the second quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CAMP over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Lynrock Lake held the most valuable stake in CalAmp Corp. (NASDAQ:CAMP), which was worth $75.7 million at the end of the third quarter. On the second spot was Trigran Investments which amassed $6.3 million worth of shares. Royce & Associates, Renaissance Technologies, and Harvey Partners 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 Lynrock Lake allocated the biggest weight to CalAmp Corp. (NASDAQ:CAMP), around 7.46% of its 13F portfolio. Harvey Partners is also relatively very bullish on the stock, earmarking 1.79 percent of its 13F equity portfolio to CAMP.

As industrywide interest jumped, some big names were breaking ground themselves. Trigran Investments, managed by Douglas T. Granat, initiated the most valuable position in CalAmp Corp. (NASDAQ:CAMP). Trigran Investments had $6.3 million invested in the company at the end of the quarter. Jeffrey Moskowitz’s Harvey Partners also made a $2 million investment in the stock during the quarter. The following funds were also among the new CAMP investors: Greg Eisner’s Engineers Gate Manager, Mike Vranos’s Ellington, and Minhua Zhang’s Weld Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to CalAmp Corp. (NASDAQ:CAMP). These stocks are PCB Bancorp (NASDAQ:PCB), OncoCyte Corporation (NYSE:OCX), Chemung Financial Corp. (NASDAQ:CHMG), and Green Plains Partners LP (NASDAQ:GPP). This group of stocks’ market valuations are similar to CAMP’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PCB 6 12407 0
OCX 5 48092 1
CHMG 3 9092 0
GPP 2 15954 1
Average 4 21386 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $94 million in CAMP’s case. PCB Bancorp (NASDAQ:PCB) is the most popular stock in this table. On the other hand Green Plains Partners LP (NASDAQ:GPP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks CalAmp Corp. (NASDAQ:CAMP) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on CAMP as the stock returned 78% in Q2 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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