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Hedge Funds Are Dumping Caleres Inc (CAL)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Caleres Inc (NYSE:CAL) based on that data.

Caleres Inc (NYSE:CAL) shareholders have witnessed a decrease in hedge fund interest of late. Our calculations also showed that CAL 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.

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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.

Lee Ainslie MAVERICK CAPITAL

Lee Ainslie of Maverick Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Now let’s go over the new hedge fund action regarding Caleres Inc (NYSE:CAL).

What does smart money think about Caleres Inc (NYSE:CAL)?

At Q1’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in CAL a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the most valuable position in Caleres Inc (NYSE:CAL), worth close to $4.4 million, amounting to 0.1% of its total 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $2.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that are bullish encompass Lee Ainslie’s Maverick Capital, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to Caleres Inc (NYSE:CAL), around 0.73% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.06 percent of its 13F equity portfolio to CAL.

Since Caleres Inc (NYSE:CAL) has experienced declining sentiment from the smart money, it’s easy to see that there lies a certain “tier” of fund managers that slashed their entire stakes by the end of the first quarter. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the largest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $1.3 million in stock. Donald Sussman’s fund, Paloma Partners, also said goodbye to its stock, about $0.7 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 4 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks similar to Caleres Inc (NYSE:CAL). These stocks are Regis Corporation (NYSE:RGS), Gain Capital Holdings Inc (NYSE:GCAP), Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), and Red Violet, Inc. (NASDAQ:RDVT). This group of stocks’ market valuations match CAL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RGS 9 79872 -2
GCAP 14 14540 4
LXRX 11 12887 0
RDVT 5 9917 -4
Average 9.75 29304 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $17 million in CAL’s case. Gain Capital Holdings Inc (NYSE:GCAP) is the most popular stock in this table. On the other hand Red Violet, Inc. (NASDAQ:RDVT) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Caleres Inc (NYSE:CAL) 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 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on CAL as the stock returned 54.5% so far in Q2 (through June 25th) 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.