We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Citrix Systems, Inc. (NASDAQ:CTXS) in this article.
Is Citrix Systems, Inc. (NASDAQ:CTXS) undervalued? The smart money is becoming hopeful. The number of bullish hedge fund positions advanced by 3 recently. Our calculations also showed that CTXS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). CTXS was in 34 hedge funds’ portfolios at the end of December. There were 31 hedge funds in our database with CTXS positions at the end of the previous quarter.
To the average investor there are a large number of signals market participants put to use to grade stocks. Some of the less utilized signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can trounce the broader indices by a superb margin (see the details here).
Paul Singer of Elliott Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to view the key hedge fund action regarding Citrix Systems, Inc. (NASDAQ:CTXS).
What does smart money think about Citrix Systems, Inc. (NASDAQ:CTXS)?
At the end of the fourth quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. By comparison, 36 hedge funds held shares or bullish call options in CTXS a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Citrix Systems, Inc. (NASDAQ:CTXS) was held by Elliott Management, which reported holding $576.9 million worth of stock at the end of September. It was followed by SRS Investment Management with a $202.3 million position. Other investors bullish on the company included GLG Partners, Citadel Investment Group, and AQR Capital Management. In terms of the portfolio weights assigned to each position Anavon Capital allocated the biggest weight to Citrix Systems, Inc. (NASDAQ:CTXS), around 11.85% of its 13F portfolio. Fir Tree is also relatively very bullish on the stock, earmarking 6.5 percent of its 13F equity portfolio to CTXS.
Consequently, specific money managers have jumped into Citrix Systems, Inc. (NASDAQ:CTXS) headfirst. Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, created the largest position in Citrix Systems, Inc. (NASDAQ:CTXS). Scopia Capital had $71.1 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $58.4 million position during the quarter. The following funds were also among the new CTXS investors: Avi Fruchter’s Anavon Capital, Michael Gelband’s ExodusPoint Capital, and Lee Ainslie’s Maverick Capital.
Let’s check out hedge fund activity in other stocks similar to Citrix Systems, Inc. (NASDAQ:CTXS). These stocks are CenturyLink, Inc. (NYSE:CTL), Quest Diagnostics Incorporated (NYSE:DGX), MarketAxess Holdings Inc. (NASDAQ:MKTX), and Liberty Global plc (NASDAQ:LBTYA). This group of stocks’ market caps are closest to CTXS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTL | 34 | 1144168 | 2 |
| DGX | 31 | 433283 | -5 |
| MKTX | 27 | 636917 | 1 |
| LBTYA | 27 | 1199061 | -3 |
| Average | 29.75 | 853357 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.75 hedge funds with bullish positions and the average amount invested in these stocks was $853 million. That figure was $1514 million in CTXS’s case. CenturyLink, Inc. (NYSE:CTL) is the most popular stock in this table. On the other hand MarketAxess Holdings Inc. (NASDAQ:MKTX) is the least popular one with only 27 bullish hedge fund positions. Citrix Systems, Inc. (NASDAQ:CTXS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but still beat the market by 3.2 percentage points. Hedge funds were also right about betting on CTXS as the stock returned 0.2% during the first quarter (through March 16th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
