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Hedge Funds Underestimated CalAmp Corp. (CAMP) As the Wireless Company Posts Impressive Quarterly Results

After posting strong first quarter fiscal 2016 financial results, the shares of CalAmp Corp. (NASDAQ:CAMP) jumped in excess of 8% during today’s trading session. The wireless solutions provider reported revenues of $65.4 million for the quarter with earnings per share of $0.26, which are in-line with the earnings estimates of analysts at Thompson Reuters. However, the annual revenue guidance of CalAmp Corp. (NASDAQ:CAMP) took precedence over the growth in revenue and earnings per share. The wireless services company is expecting annual revenues of $280 million to $290 million in 2016, which is better than the analysts’ expectations of $282.8 million at the middle of the range. While discussing the quarterly results, Michael Burdiek, President and Chief Executive Officer of CalAmp Corp, added, “Contributing to our strong results were record quarterly revenues posted by our Mobile Resource Management products business as well as broad based growth in our Wireless Networks business. Our Satellite segment revenue at $7.6 million was in line with expectations and added meaningfully to our bottom line profitability and operating cash flow.” Considering the boost in the share prices of CalAmp Corp. (NASDAQ:CAMP), the investors seem to agree with the strength of the company and are optimistic about the revenue and earnings growth guidance issued by the company.

CalAmp Corp. Earnings Call Transcript

The shares of CalAmp Corp have grown by over 8% year-to-date after trading mostly level for 2015. Hedge funds didn’t predict this upward movement and underestimated the stock, at least according to their March 31 positions (we’ll see in the coming weeks if they did indeed make a more bullish move on the stock in the second quarter). Ten hedge fund managers in our database held positions in the company with aggregate investments of $13.54 million at the end of the first quarter against investments of $29.06 million held by 12 hedge fund investors at the end of 2014. While shares did decline somewhat sharply in the first quarter, it doesn’t account for the drop

Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 135% over the last 34 months, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).

We also track insider activity, looking in particular for purchases. Insiders were more or less inactive for the past six months in CalAmp however, with the only sale coming from Richard Vitelle, Executive Vice President and CFO at CalAmp Corp, of 3,000 shares sold on February 4, 2015.

These quarterly results are likely to attract more investments from hedge fund managers. For now, let’s analyze the current standings of hedge fund investors in the company.

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