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Hedge Funds Warming Up To CalAmp Corp. (CAMP)

We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like CalAmp Corp. (NASDAQ:CAMP).

Is CalAmp Corp. (NASDAQ:CAMP) a healthy stock for your portfolio? Prominent investors are buying. The number of long hedge fund positions inched up by 1 in recent months. Our calculations also showed that CAMP isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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 market by 40 percentage points since May 2014 through May 30, 2019 (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.

John Overdeck of Two Sigma

Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. Let’s take a look at the key hedge fund action regarding CalAmp Corp. (NASDAQ:CAMP).

How have hedgies been trading CalAmp Corp. (NASDAQ:CAMP)?

At Q2’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in CAMP a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

No of Hedge Funds with CAMP Positions

Of the funds tracked by Insider Monkey, Cynthia Paul’s Lynrock Lake has the biggest position in CalAmp Corp. (NASDAQ:CAMP), worth close to $71.7 million, corresponding to 11.8% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, with a $12.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions include D. E. Shaw’s D E Shaw, Paul Marshall and Ian Wace’s Marshall Wace LLP and John Overdeck and David Siegel’s Two Sigma Advisors.

As industrywide interest jumped, some big names were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the largest position in CalAmp Corp. (NASDAQ:CAMP). Marshall Wace LLP had $3.7 million invested in the company at the end of the quarter. Jim Roumell’s Roumell Asset Management also initiated a $1.6 million position during the quarter. The other funds with new positions in the stock are Matthew Hulsizer’s PEAK6 Capital Management, Ken Griffin’s Citadel Investment Group, and Michael Gelband’s ExodusPoint Capital.

Let’s check out hedge fund activity in other stocks similar to CalAmp Corp. (NASDAQ:CAMP). We will take a look at MagnaChip Semiconductor Corporation (NYSE:MX), Chuy’s Holdings Inc (NASDAQ:CHUY), Gladstone Investment Corporation (NASDAQ:GAIN), and AVROBIO, Inc. (NASDAQ:AVRO). All of these stocks’ market caps match CAMP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MX 21 139594 3
CHUY 12 18664 2
GAIN 4 1798 -3
AVRO 9 54946 5
Average 11.5 53751 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $100 million in CAMP’s case. MagnaChip Semiconductor Corporation (NYSE:MX) is the most popular stock in this table. On the other hand Gladstone Investment Corporation (NASDAQ:GAIN) is the least popular one with only 4 bullish hedge fund positions. CalAmp Corp. (NASDAQ:CAMP) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CAMP wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CAMP were disappointed as the stock returned -1.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

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