The shares of Capital One Financial Corp. (NYSE:COF) are down by 12.05% after dismal second quarter 2015 financial results were posted by the company after-hours yesterday. Today’s decline wiped out the gains the stock had made in 2015 of 9.96% in a single, fell swoop. The finance company missed Wall Streets’ net income as well as revenue expectations for the quarter, with reported income of $863 million or $1.78 per share, down 29% year-over-year. Analysts were expecting quarterly profits of $1.97 per share. Capital One Financial Corp. (NYSE:COF) announced revenues of $5.67 billion, which also fell short of the market estimates of $5.76 billion.
Richard D. Fairbank, CEO of Capital One Financial Corp. (NYSE:COF) ensured the company’s commitment towards creating shareholder value in the long run. He stated, “We remain compelled by the opportunity, need, and urgency of digital transformation, and we continue to see growth opportunities across our businesses, particularly in Domestic Card. Capital One is well positioned to sustain attractive shareholder returns over the long term.”
Smart Money held a bullish outlook on the company at the end of the first quarter, as 51 hedge fund managers held $1.82 billion in shares of the financial company against investments of $1.60 billion from 55 hedge fund investors at the end of 2014. While the overall number of investors fell, their aggregate holdings increased notably, factoring in that the stock also declined by about 4% during the first quarter.
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Despite positive hedge fund sentiment, the insiders made at least 32 sales transactions in 2015. John G. Finneran Jr., General Counsel and Corporate Secretary of Capital One Financial Corporation, sold 271,300 shares of the company in 2015, with the largest sales transaction, of 100,000 shares, being conducted on June 15.
For a better understanding of hedge fund sentiment, let’s review the recent action encompassing Capital One Financial Corp. (NYSE:COF).
How are hedge funds trading Capital One Financial Corp. (NYSE:COF)?
At the end of the first quarter, a total of 51 of the hedge funds tracked by Insider Monkey were bullish in this stock, a decline of four from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully.
According to hedge fund experts at Insider Monkey, Ric Dillon’s Diamond Hill Capital held the largest stake in the company at the end of the first quarter, of 3.54 million shares worth $278.92 million. Thomas E. Claugus’ GMT Capital had the second-largest position in Capital One Financial Corp. (NYSE:COF), worth close to $179.8 million with 2.28 million shares, accounting for 4.4% of its total 13F portfolio. Some other hedge funds that hold long positions contain Andreas Halvorsen’s Viking Global, David Harding’s Winton Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Since Capital One Financial Corp. (NYSE:COF) has experienced a decline in the number of investors, it’s easy to see that there exists a select few hedge funds who were dropping their entire stakes during the first quarter. At the top of the heap, Phill Gross and Robert Atchinson‘s Adage Capital Management dumped the biggest investment of all the hedgies followed by Insider Monkey, totaling close to $72 million in stock. Clint Carlson’s fund, Carlson Capital, also cut its stock, about $42.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by four funds by the end of the first quarter.
Considering positive hedge fund sentiment at the end of the first quarter, we would recommend investors keep a close eye on the stock and invest in case of further weakness.
Disclosure: None
