Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Citizens Financial Group Inc (NYSE:CFG) has experienced an increase in hedge fund sentiment in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as CenturyLink, Inc. (NYSE:CTL), ServiceNow Inc (NYSE:NOW), and Autodesk, Inc. (NASDAQ:ADSK) to gather more data points.
Follow Citizens Financial Group Inc (NYSE:CFG)
Follow Citizens Financial Group Inc (NYSE:CFG)
In the financial world, there are many gauges stock market investors have at their disposal to evaluate their stock investments. A pair of the most useful gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the top money managers can outclass the market by a solid margin (see the details here).
David Eihorn’s Greenlight Capital was one of the shareholders of Citizens Financial Group, but sold the stake last year. In a letter to investors from 2014, Greenlight said:
“Citizens Financial Group (CFG) went public at the end of the third quarter of 2014. The Royal Bank of Scotland (RBS) sold 25% of its stake in the IPO and has plans to divest its remaining stake by the end of 2016. While CFG is overcapitalized and currently generates a low ROE relative to peers, it plans to improve its ROE over the next two years through a combination of loan and fee income growth, cost reductions, capital return and a partial normalization of interest rates. We purchased CFG at $22.01, a discount to tangible book value and a significant discount to its banking peers. Over time, we believe the eventual exit of RBS and improvement in CFG’s ROE will drive improvement in the stock’s valuation. CFG management received stock incentives at the time of the IPO, aligning their interests with shareholders.CFG shares ended the quarter at $24.96.”
Keeping this in mind, we’re going to go over the new action regarding Citizens Financial Group Inc (NYSE:CFG).
How have hedgies been trading Citizens Financial Group Inc (NYSE:CFG)?
At the Q4’s end, a total of 67 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the previous quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Cliff Asness’s AQR Capital Management has the most valuable position in Citizens Financial Group Inc (NYSE:CFG), worth close to $198.5 million, corresponding to 0.3% of its total 13F portfolio. Coming in second is Ken Griffin’s Citadel Investment Group, with a $168.1 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish contain Anthony Bozza’s Lakewood Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Robert Pohly’s Samlyn Capital.
As industry-wide interest jumped, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most valuable position in Citizens Financial Group Inc (NYSE:CFG). Balyasny Asset Management had $67.3 million invested in the company at the end of the quarter. Shane Finemore’s Manikay Partners also initiated a $44.5 million position during the quarter. The other funds with new positions in the stock are Keith Meister’s Corvex Capital, Neil Chriss’s Hutchin Hill Capital, and Louis Bacon’s Moore Global Investments.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Citizens Financial Group Inc (NYSE:CFG) but similarly valued. We will take a look at CenturyLink, Inc. (NYSE:CTL), ServiceNow Inc (NYSE:NOW), Autodesk, Inc. (NASDAQ:ADSK), and NetEase, Inc (ADR) (NASDAQ:NTES). This group of stocks’ market caps resemble CFG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTL | 30 | 296256 | 6 |
| NOW | 35 | 826530 | 9 |
| ADSK | 34 | 3959856 | 2 |
| NTES | 25 | 3070127 | -1 |
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $2.04 billion, which is lower than the $2.17 billion in CFG’s case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand NetEase, Inc (ADR) (NASDAQ:NTES) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Citizens Financial Group Inc (NYSE:CFG) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
