Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Citizens Financial Group Inc (NYSE:CFG).
Citizens Financial Group Inc (NYSE:CFG) has seen a decrease in activity from the world’s largest hedge funds lately. Citizens Financial Group Inc (NYSE:CFG) was in 34 hedge funds’ portfolios at the end of September. The all time high for this statistic is 67. Our calculations also showed that CFG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Fred DiSanto of Ancora Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now we’re going to view the latest hedge fund action surrounding Citizens Financial Group Inc (NYSE:CFG).
Do Hedge Funds Think CFG Is A Good Stock To Buy Now?
At third quarter’s end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 36 hedge funds with a bullish position in CFG a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Impax Asset Management held the most valuable stake in Citizens Financial Group Inc (NYSE:CFG), which was worth $37.5 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $37.2 million worth of shares. Hosking Partners, Ancora Advisors, 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 Soapstone Capital allocated the biggest weight to Citizens Financial Group Inc (NYSE:CFG), around 9.87% of its 13F portfolio. Factorial Partners is also relatively very bullish on the stock, designating 2.96 percent of its 13F equity portfolio to CFG.
Since Citizens Financial Group Inc (NYSE:CFG) has witnessed a decline in interest from the smart money, we can see that there exists a select few hedgies who were dropping their positions entirely by the end of the third quarter. Intriguingly, Brandon Haley’s Holocene Advisors cut the largest stake of the 750 funds followed by Insider Monkey, comprising close to $45.9 million in stock. Phill Gross and Robert Atchinson’s fund, Adage Capital Management, also cut its stock, about $21.3 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s go over 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 Entergy Corporation (NYSE:ETR), RingCentral Inc (NYSE:RNG), Darden Restaurants, Inc. (NYSE:DRI), ON Semiconductor Corporation (NASDAQ:ON), Cheniere Energy Partners LP (NYSE:CQP), Ulta Beauty, Inc. (NASDAQ:ULTA), and Trip.com Group Limited (NASDAQ:TCOM). All of these stocks’ market caps are closest to CFG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ETR | 30 | 283209 | -1 |
| RNG | 48 | 2905250 | 1 |
| DRI | 25 | 337086 | -19 |
| ON | 41 | 1251738 | -3 |
| CQP | 3 | 10790 | 1 |
| ULTA | 42 | 935547 | 2 |
| TCOM | 36 | 1794035 | -5 |
| Average | 32.1 | 1073951 | -3.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $1074 million. That figure was $362 million in CFG’s case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSE:CQP) is the least popular one with only 3 bullish hedge fund positions. Citizens Financial Group Inc (NYSE:CFG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CFG is 52.7. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately CFG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CFG were disappointed as the stock returned 1.4% since the end of September (through 11/30) 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.
Follow Citizens Financial Group Inc (NYSE:CFG)
Follow Citizens Financial Group Inc (NYSE:CFG)
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Disclosure: None. This article was originally published at Insider Monkey.
