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Is Calix Inc (CALX) A Good Stock To Buy?

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Calix Inc (NYSE:CALX).

Calix Inc (NYSE:CALX) has experienced a decrease in hedge fund interest lately. CALX was in 14 hedge funds’ portfolios at the end of June. There were 17 hedge funds in our database with CALX positions at the end of the previous quarter. Our calculations also showed that CALX 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.

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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

CALX_oct2019

In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources  like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Let’s take a look at the fresh hedge fund action regarding Calix Inc (NYSE:CALX).

What have hedge funds been doing with Calix Inc (NYSE:CALX)?

Heading into the third quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CALX over the last 16 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Paul Marshall Marshall Wace

Among these funds, Divisar Capital held the most valuable stake in Calix Inc (NYSE:CALX), which was worth $22.3 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $19.8 million worth of shares. Moreover, Nokomis Capital, D E Shaw, and Voce Capital were also bullish on Calix Inc (NYSE:CALX), allocating a large percentage of their portfolios to this stock.

Since Calix Inc (NYSE:CALX) has witnessed a decline in interest from the smart money, it’s safe to say that there lies a certain “tier” of funds that decided to sell off their full holdings last quarter. Intriguingly, Anand Parekh’s Alyeska Investment Group dumped the biggest position of all the hedgies followed by Insider Monkey, totaling close to $3.2 million in stock. Brian C. Freckmann’s fund, Lyon Street Capital, also cut its stock, about $0.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 3 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to Calix Inc (NYSE:CALX). These stocks are Exantas Capital Corp. (NYSE:XAN), Citizens & Northern Corporation (NASDAQ:CZNC), Neptune Wellness Solutions Inc. (NASDAQ:NEPT), and KalVista Pharmaceuticals, Inc. (NASDAQ:KALV). This group of stocks’ market caps match CALX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
XAN 16 64628 -1
CZNC 2 7044 -1
NEPT 8 32369 0
KALV 15 118797 -4
Average 10.25 55710 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $94 million in CALX’s case. Exantas Capital Corp. (NYSE:XAN) is the most popular stock in this table. On the other hand Citizens & Northern Corporation (NASDAQ:CZNC) is the least popular one with only 2 bullish hedge fund positions. Calix Inc (NYSE:CALX) 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 CALX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CALX were disappointed as the stock returned -2.6% 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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