Hedge Funds Aren’t Crazy About Citigroup Inc. (C) Anymore

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Citigroup Inc. (NYSE:C) based on those filings.

Citigroup Inc. (NYSE:C) has experienced a decrease in hedge fund sentiment lately. Citigroup Inc. (NYSE:C) was in 87 hedge funds’ portfolios at the end of June. The all time high for this statistic is 121. There were 90 hedge funds in our database with C positions at the end of the first quarter. Our calculations also showed that C isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Boykin Curry of Eagle Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to analyze the recent hedge fund action encompassing Citigroup Inc. (NYSE:C).

Do Hedge Funds Think C Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 87 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards C over the last 24 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, ValueAct Capital held the most valuable stake in Citigroup Inc. (NYSE:C), which was worth $1467.8 million at the end of the second quarter. On the second spot was Eagle Capital Management which amassed $1451.6 million worth of shares. Pzena Investment Management, Citadel Investment Group, and Two Sigma Advisors 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 ValueAct Capital allocated the biggest weight to Citigroup Inc. (NYSE:C), around 17.55% of its 13F portfolio. Kahn Brothers is also relatively very bullish on the stock, designating 8.48 percent of its 13F equity portfolio to C.

Since Citigroup Inc. (NYSE:C) has faced a decline in interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of funds that decided to sell off their entire stakes heading into Q3. Intriguingly, Stanley Druckenmiller’s Duquesne Capital said goodbye to the largest stake of the 750 funds tracked by Insider Monkey, totaling about $154.6 million in stock. Richard Oldfield’s fund, Oldfield Partners, also sold off its stock, about $113.3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds heading into Q3.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Citigroup Inc. (NYSE:C) but similarly valued. We will take a look at Union Pacific Corporation (NYSE:UNP), Royal Bank of Canada (NYSE:RY), Sea Limited (NYSE:SE), NextEra Energy, Inc. (NYSE:NEE), Anheuser-Busch InBev SA/NV (NYSE:BUD), The Boeing Company (NYSE:BA), and Amgen, Inc. (NASDAQ:AMGN). All of these stocks’ market caps match C’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 54.3 hedge funds with bullish positions and the average amount invested in these stocks was $3585 million. That figure was $6155 million in C’s case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand Royal Bank of Canada (NYSE:RY) is the least popular one with only 18 bullish hedge fund positions. Citigroup Inc. (NYSE:C) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for C is 63.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.1% in 2021 through September 20th and beat the market again by 6.9 percentage points. Unfortunately C wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on C were disappointed as the stock returned -4.2% since the end of June (through 9/20) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.