In this article we will take a look at whether hedge funds think Callaway Golf Company (NYSE:ELY) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is ELY a good stock to buy? Callaway Golf Company (NYSE:ELY) shareholders have witnessed an increase in support from the world’s most elite money managers recently. Callaway Golf Company (NYSE:ELY) was in 32 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 24 hedge funds in our database with ELY positions at the end of the second quarter. Our calculations also showed that ELY isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
According to most investors, hedge funds are perceived as worthless, outdated investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open at present, We choose to focus on the bigwigs of this club, approximately 850 funds. These hedge fund managers handle the lion’s share of the hedge fund industry’s total capital, and by paying attention to their highest performing investments, Insider Monkey has formulated a number of investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Israel Englander of Millennium Management
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Do Hedge Funds Think ELY Is A Good Stock To Buy Now?
At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in ELY over the last 21 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Cadian Capital was the largest shareholder of Callaway Golf Company (NYSE:ELY), with a stake worth $98.9 million reported as of the end of September. Trailing Cadian Capital was Fisher Asset Management, which amassed a stake valued at $69.7 million. JANA Partners, Nitorum Capital, and Millennium Management 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 JANA Partners allocated the biggest weight to Callaway Golf Company (NYSE:ELY), around 5.04% of its 13F portfolio. Six Columns Capital is also relatively very bullish on the stock, setting aside 3.53 percent of its 13F equity portfolio to ELY.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Nitorum Capital, managed by Seth Rosen, assembled the most valuable position in Callaway Golf Company (NYSE:ELY). Nitorum Capital had $39.4 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $31.5 million investment in the stock during the quarter. The other funds with brand new ELY positions are Mark Coe’s Intrinsic Edge Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Kamyar Khajavi’s MIK Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Callaway Golf Company (NYSE:ELY) but similarly valued. These stocks are Studio City International Holdings Limited (NYSE:MSC), Four Corners Property Trust, Inc. (NYSE:FCPT), Coeur Mining, Inc. (NYSE:CDE), Jack in the Box Inc. (NASDAQ:JACK), Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB), Cerence Inc. (NASDAQ:CRNC), and Assured Guaranty Ltd. (NYSE:AGO). This group of stocks’ market caps are closest to ELY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MSC | 3 | 277757 | 0 |
| FCPT | 13 | 67476 | -6 |
| CDE | 15 | 44740 | 1 |
| JACK | 38 | 314788 | 7 |
| OMAB | 7 | 28689 | 3 |
| CRNC | 12 | 135180 | -2 |
| AGO | 27 | 205479 | 2 |
| Average | 16.4 | 153444 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.4 hedge funds with bullish positions and the average amount invested in these stocks was $153 million. That figure was $391 million in ELY’s case. Jack in the Box Inc. (NASDAQ:JACK) is the most popular stock in this table. On the other hand Studio City International Holdings Limited (NYSE:MSC) is the least popular one with only 3 bullish hedge fund positions. Callaway Golf Company (NYSE:ELY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ELY is 81.4. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on ELY as the stock returned 29.3% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Topgolf Callaway Brands Corp. (NYSE:MODG)
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Disclosure: None. This article was originally published at Insider Monkey.
