The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Citizens Financial Group Inc (NYSE:CFG) and determine whether the smart money was really smart about this stock.
Citizens Financial Group Inc (NYSE:CFG) has experienced an increase in hedge fund interest of late. Citizens Financial Group Inc (NYSE:CFG) was in 47 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 67. Our calculations also showed that CFG isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David E. Shaw of D.E. Shaw
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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 precious metals prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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 key hedge fund action regarding Citizens Financial Group Inc (NYSE:CFG).
How are hedge funds trading Citizens Financial Group Inc (NYSE:CFG)?
At Q2’s end, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CFG over the last 20 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Arrowstreet Capital was the largest shareholder of Citizens Financial Group Inc (NYSE:CFG), with a stake worth $133.1 million reported as of the end of September. Trailing Arrowstreet Capital was Eminence Capital, which amassed a stake valued at $114.5 million. Citadel Investment Group, Adage Capital Management, and D E Shaw 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 Castine Capital Management allocated the biggest weight to Citizens Financial Group Inc (NYSE:CFG), around 9.05% of its 13F portfolio. Soapstone Capital is also relatively very bullish on the stock, dishing out 6.91 percent of its 13F equity portfolio to CFG.
Consequently, key hedge funds were leading the bulls’ herd. Kettle Hill Capital Management, managed by Andrew Kurita, initiated the most outsized position in Citizens Financial Group Inc (NYSE:CFG). Kettle Hill Capital Management had $12.5 million invested in the company at the end of the quarter. Jed Nussdorf’s Soapstone Capital also made a $12 million investment in the stock during the quarter. The other funds with brand new CFG positions are Brandon Haley’s Holocene Advisors, Sander Gerber’s Hudson Bay Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s go over hedge fund activity in other stocks similar to Citizens Financial Group Inc (NYSE:CFG). These stocks are StoneCo Ltd. (NASDAQ:STNE), United Rentals, Inc. (NYSE:URI), Booz Allen Hamilton Holding Corporation (NYSE:BAH), Cable One Inc (NYSE:CABO), Regions Financial Corporation (NYSE:RF), Credicorp Ltd. (NYSE:BAP), and C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). This group of stocks’ market caps match CFG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STNE | 35 | 1342781 | 1 |
| URI | 40 | 889794 | -3 |
| BAH | 25 | 219237 | -2 |
| CABO | 24 | 684886 | 1 |
| RF | 26 | 191710 | -11 |
| BAP | 20 | 174521 | -2 |
| CHRW | 28 | 441588 | -4 |
| Average | 28.3 | 563502 | -2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.3 hedge funds with bullish positions and the average amount invested in these stocks was $564 million. That figure was $841 million in CFG’s case. United Rentals, Inc. (NYSE:URI) is the most popular stock in this table. On the other hand Credicorp Ltd. (NYSE:BAP) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Citizens Financial Group Inc (NYSE:CFG) is more popular among hedge funds. Our overall hedge fund sentiment score for CFG is 77. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Unfortunately CFG wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CFG were disappointed as the stock returned 4.1% since the end of the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Citizens Financial Group Inc (NYSE:CFG)
Follow Citizens Financial Group Inc (NYSE:CFG)
Disclosure: None. This article was originally published at Insider Monkey.
