Is Callaway Golf Company (ELY) Going to Burn These Hedge Funds?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Callaway Golf Company (NYSE:ELY), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Callaway Golf Company (NYSE:ELY) a buy right now? Hedge funds were becoming less hopeful. The number of long hedge fund positions went down by 1 in recent months. Callaway Golf Company (NYSE:ELY) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 40. Our calculations also showed that ELY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s review the recent hedge fund action surrounding Callaway Golf Company (NYSE:ELY).


Ken Fisher of Fisher Asset Management

Do Hedge Funds Think ELY Is A Good Stock To Buy Now?

At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from one quarter earlier. By comparison, 32 hedge funds held shares or bullish call options in ELY 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.

Among these funds, Fisher Asset Management held the most valuable stake in Callaway Golf Company (NYSE:ELY), which was worth $88.3 million at the end of the third quarter. On the second spot was Woodson Capital Management which amassed $42.6 million worth of shares. Marlowe Partners, Nitorum Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Marlowe Partners allocated the biggest weight to Callaway Golf Company (NYSE:ELY), around 20.95% of its 13F portfolio. Stony Point Capital is also relatively very bullish on the stock, designating 4.34 percent of its 13F equity portfolio to ELY.

Judging by the fact that Callaway Golf Company (NYSE:ELY) has experienced bearish sentiment from the smart money, it’s easy to see that there lies a certain “tier” of hedgies that decided to sell off their entire stakes heading into Q4. It’s worth mentioning that Alexander Mitchell’s Scopus Asset Management dropped the largest investment of the 750 funds monitored by Insider Monkey, worth close to $57.3 million in stock. Noam Gottesman’s fund, GLG Partners, also dropped its stock, about $19.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to Callaway Golf Company (NYSE:ELY). These stocks are New Residential Investment Corp (NYSE:NRZ), BWX Technologies Inc (NYSE:BWXT), NOV Inc. (NYSE:NOV), Unum Group (NYSE:UNM), MAXIMUS, Inc. (NYSE:MMS), NCR Corporation (NYSE:NCR), and American National Group Inc. (NASDAQ:ANAT). This group of stocks’ market values match ELY’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NRZ 16 93063 -4
BWXT 17 168813 -3
NOV 34 982583 4
UNM 30 350040 7
MMS 14 89836 -12
NCR 28 517584 -10
ANAT 16 93762 -4
Average 22.1 327954 -3.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $328 million. That figure was $444 million in ELY’s case. NOV Inc. (NYSE:NOV) is the most popular stock in this table. On the other hand MAXIMUS, Inc. (NYSE:MMS) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Callaway Golf Company (NYSE:ELY) is more popular among hedge funds. Our overall hedge fund sentiment score for ELY is 82.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately ELY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ELY were disappointed as the stock returned -2.4% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

Follow Topgolf Callaway Brands Corp. (NYSE:MODG)

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