The stock of Callaway Golf (ELY 14.04, -1.02, -6.7%) has been an excellent performer in 2017, having risen 37% through Tuesday's close in a fairly steady manner. That performance can be likened to hitting it down the middle of the fairway, sticking the approach shot, and making the putt for birdie on a Par 4.
Today, though, the stock is in the rough while the company is also in the news.
Specifically, Callaway Golf disclosed in an 8-K SEC filing that it made an additional $20.0 million investment in Topgolf International, a company in which Callaway Golf owns a minority interest.
The investment was completed through a private placement that was managed by Fidelity Investment. According to Callaway Golf, that investment raised its investment in Topgolf to $70.5 million on a cost basis and brought its ownership stake to approximately 14% of Topgolf.
Callaway estimates the fair value of its Topgolf shares is approximately $290 million, which is to say it has had a nice return on its investment so far. The caveat was provided, however, that the shares are illiquid and that there is no assurance Callaway Golf could sell its shares for the estimated fair value, or at all.
Callaway Golf's own market capitalization is $1.32 billion, which makes it a small-cap company. Shares of ELY, then, have greatly outperformed the Russell 2000, which was up 13.8% year-to-date as of Tuesday's close.
On a related note, DA Davidson raised its price target for ELY to $18 from $17 while the analyst at Compass Point downgraded ELY today to Sell from Neutral.