A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Credit Suisse Group AG (NYSE:CS).
Credit Suisse Group AG (NYSE:CS) has experienced an increase in support from the world’s most elite money managers in recent months. Our calculations also showed that CS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a gander at the key hedge fund action regarding Credit Suisse Group AG (NYSE:CS).
How are hedge funds trading Credit Suisse Group AG (NYSE:CS)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the second quarter of 2019. By comparison, 13 hedge funds held shares or bullish call options in CS a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Credit Suisse Group AG (NYSE:CS), which was worth $137.2 million at the end of the third quarter. On the second spot was Orbis Investment Management which amassed $19.3 million worth of shares. Masters Capital Management, Springhouse Capital Management, and Citadel Investment Group 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 Springhouse Capital Management allocated the biggest weight to Credit Suisse Group AG (NYSE:CS), around 9.28% of its 13F portfolio. Masters Capital Management is also relatively very bullish on the stock, dishing out 1.09 percent of its 13F equity portfolio to CS.
As aggregate interest increased, key hedge funds have been driving this bullishness. Pzena Investment Management, managed by Richard S. Pzena, established the most valuable position in Credit Suisse Group AG (NYSE:CS). Pzena Investment Management had $7.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.4 million investment in the stock during the quarter. The only other fund with a brand new CS position is Matthew Tewksbury’s Stevens Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Credit Suisse Group AG (NYSE:CS) but similarly valued. We will take a look at SunTrust Banks, Inc. (NYSE:STI), O’Reilly Automotive Inc (NASDAQ:ORLY), Regeneron Pharmaceuticals Inc (NASDAQ:REGN), and ONEOK, Inc. (NYSE:OKE). 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 |
|---|---|---|---|
| STI | 31 | 1100197 | 0 |
| ORLY | 42 | 2055261 | -8 |
| REGN | 33 | 869893 | -4 |
| OKE | 23 | 308569 | 2 |
| Average | 32.25 | 1083480 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.25 hedge funds with bullish positions and the average amount invested in these stocks was $1083 million. That figure was $227 million in CS’s case. O’Reilly Automotive Inc (NASDAQ:ORLY) is the most popular stock in this table. On the other hand ONEOK, Inc. (NYSE:OKE) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Credit Suisse Group AG (NYSE:CS) is even less popular than OKE. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on CS, though not to the same extent, as the stock returned 7.2% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
