In this article we will check out the progression of hedge fund sentiment towards Calyxt, Inc. (NASDAQ:CLXT) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Calyxt, Inc. (NASDAQ:CLXT) has seen an increase in support from the world’s most elite money managers of late. Calyxt, Inc. (NASDAQ:CLXT) was in 4 hedge funds’ portfolios at the end of September. The all time high for this statistics is 5. There were 3 hedge funds in our database with CLXT holdings at the end of June. Our calculations also showed that CLXT 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.
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 S&P 500 ETFs by 66 percentage points since March 2017 (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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 take a look at the latest hedge fund action encompassing Calyxt, Inc. (NASDAQ:CLXT).
How have hedgies been trading Calyxt, Inc. (NASDAQ:CLXT)?
At third quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the second quarter of 2020. By comparison, 5 hedge funds held shares or bullish call options in CLXT 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Columbus Hill Capital Management, managed by Kevin D. Eng, holds the largest position in Calyxt, Inc. (NASDAQ:CLXT). Columbus Hill Capital Management has a $2.8 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is D. E. Shaw of D E Shaw, with a $0.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions comprise Philip Hempleman’s Ardsley Partners, Renaissance Technologies and . In terms of the portfolio weights assigned to each position Columbus Hill Capital Management allocated the biggest weight to Calyxt, Inc. (NASDAQ:CLXT), around 0.35% of its 13F portfolio. Ardsley Partners is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to CLXT.
Now, some big names were breaking ground themselves. Ardsley Partners, managed by Philip Hempleman, initiated the most outsized position in Calyxt, Inc. (NASDAQ:CLXT). Ardsley Partners had $0.3 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks similar to Calyxt, Inc. (NASDAQ:CLXT). These stocks are Marrone Bio Innovations Inc (NASDAQ:MBII), American Outdoor Brands, Inc. (NASDAQ:AOUT), Danaos Corporation (NYSE:DAC), SM Energy Company (NYSE:SM), Rocky Brands, Inc. (NASDAQ:RCKY), SuRo Capital Corp. (NASDAQ:SSSS), and Spok Holdings Inc (NASDAQ:SPOK). This group of stocks’ market values are closest to CLXT’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.6 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $4 million in CLXT’s case. SM Energy Company (NYSE:SM) is the most popular stock in this table. On the other hand Marrone Bio Innovations Inc (NASDAQ:MBII) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Calyxt, Inc. (NASDAQ:CLXT) is even less popular than MBII. Our overall hedge fund sentiment score for CLXT is 30. 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. Hedge funds dodged a bullet by taking a bearish stance towards CLXT. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th but managed to beat the market again by 16.1 percentage points. Unfortunately CLXT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CLXT investors were disappointed as the stock returned -29% since the end of the third quarter (through 11/27) 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 most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.