The credit agency Fitch downgraded the long term default rating of Credit Suisse Group AG (ADR) (NYSE:CS) to A-minus from A yesterday, citing the bank’s dependence on volatile capital markets as the reason for the downgrade. Credit Suisse Group AG (ADR) (NYSE:CS) reported a second consecutive quarterly loss earlier in May, dragged down by mark-to-market losses in securitized products and distressed debt. The bank is trying to improve its position and has said it will exit from some of the problem categories. Shares of the bank are up by 2% despite the downgrade. However, year-to-date, the stock has lost over 30% and the smart money sentiment towards the stock is weak, despite an increase in the number of funds with long positions during the first quarter.
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The 750+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Credit Suisse Group AG (ADR) (NYSE:CS).
Credit Suisse Group AG (ADR) (NYSE:CS) shareholders have witnessed an increase in hedge fund interest in recent months. CS was in 10 hedge funds’ portfolios at the end of March. There were 3 hedge funds in our database with CS holdings at the end of the previous quarter. At the end of this article we will also compare CS to other stocks, including Baxalta Inc (NYSE:BXLT), V.F. Corporation (NYSE:VFC), and Equity Residential (NYSE:EQR) to get a better sense of its popularity.
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Of the funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management has the number one position in Credit Suisse Group AG (ADR) (NYSE:CS), worth close to $149.9 million, amounting to 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Masters Capital Management, led by Mike Masters, which holds a $28.3 million position; 0.6% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism contain Brian Gaines’s Springhouse Capital Management, and Ken Griffin’s Citadel Investment Group.
On the next page, we are going to take a look at some funds that initiated stakes in Credit Suisse during the first quarter of 2016.
As one would reasonably expect, some big names have been driving this bullishness. Masters Capital Management, managed by Mike Masters, assembled the largest position in Credit Suisse Group AG (ADR) (NYSE:CS). Masters Capital Management had $28.3 million invested in the company at the end of the first quarter. Brian Gaines’s Springhouse Capital Management also initiated a $4.8 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s also examine hedge fund activity in other stocks similar to Credit Suisse Group AG (ADR) (NYSE:CS). We will take a look at Baxalta Inc (NYSE:BXLT), V.F. Corporation (NYSE:VFC), Equity Residential (NYSE:EQR), and Humana Inc (NYSE:HUM). This group of stocks’ market valuations resemble CS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BXLT | 83 | 6108746 | 33 |
| VFC | 21 | 452297 | 8 |
| EQR | 20 | 601246 | 1 |
| HUM | 64 | 5610784 | 6 |
As you can see these stocks had an average of 47 hedge funds with bullish positions and the average amount invested in these stocks was $3193 million. That figure was $192 million in CS’s case. Baxalta Inc (NYSE:BXLT) is the most popular stock in this table. On the other hand Equity Residential (NYSE:EQR) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Credit Suisse Group AG (ADR) (NYSE:CS) is even less popular than EQR. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
