Escalade, Inc. (ESCA): Hedge Funds Missed The Rally

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Escalade, Inc. (NASDAQ:ESCA) based on that data.

Escalade, Inc. (NASDAQ:ESCA) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of the first quarter of 2020. At the end of this article we will also compare ESCA to other stocks including Platinum Group Metals Limited (NYSE:PLG), Hill International Inc (NYSE:HIL), and Manitex International, Inc. (NASDAQ:MNTX) to get a better sense of its popularity.

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

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

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At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a glance at the latest hedge fund action encompassing Escalade, Inc. (NASDAQ:ESCA).

How are hedge funds trading Escalade, Inc. (NASDAQ:ESCA)?

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in ESCA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Escalade, Inc. (NASDAQ:ESCA) was held by Minerva Advisors, which reported holding $2.6 million worth of stock at the end of September. It was followed by Beddow Capital Management with a $2.2 million position. The only other hedge fund that is bullish on the company was Renaissance Technologies.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s also examine hedge fund activity in other stocks similar to Escalade, Inc. (NASDAQ:ESCA). These stocks are Platinum Group Metals Limited (NYSE:PLG), Hill International Inc (NYSE:HIL), Manitex International, Inc. (NASDAQ:MNTX), and IDEAYA Biosciences, Inc. (NASDAQ:IDYA). This group of stocks’ market values are similar to ESCA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PLG 3 3650 0
HIL 10 26366 -3
MNTX 7 7980 1
IDYA 6 12292 -3
Average 6.5 12572 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $6 million in ESCA’s case. Hill International Inc (NYSE:HIL) is the most popular stock in this table. On the other hand Platinum Group Metals Limited (NYSE:PLG) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Escalade, Inc. (NASDAQ:ESCA) is even less popular than PLG. Hedge funds clearly dropped the ball on ESCA as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 gained 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. A small number of hedge funds were also right about betting on ESCA as the stock returned 63.4% so far in the second quarter and outperformed the market by an even larger margin.

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