Here is What Hedge Funds Think About Credit Suisse Group AG (CS)

In this article you are going to find out whether hedge funds think Credit Suisse Group AG (NYSE:CS) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Credit Suisse Group AG (NYSE:CS) ready to rally soon? Prominent investors were turning less bullish. The number of bullish hedge fund bets were cut by 3 recently. Credit Suisse Group AG (NYSE:CS) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 22. Our calculations also showed that CS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 13 hedge funds in our database with CS holdings at the end of March.

To the average investor there are plenty of gauges stock traders put to use to size up stocks. Two of the most useful gauges are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top investment managers can outpace the market by a very impressive amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website .

Jeffrey Gendell of Tontine Asset Management

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. Keeping this in mind let’s take a glance at the fresh hedge fund action surrounding Credit Suisse Group AG (NYSE:CS).

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

At the end of June, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from the first quarter of 2020. On the other hand, there were a total of 14 hedge funds with a bullish position in CS a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Credit Suisse Group AG (NYSE:CS) was held by Arrowstreet Capital, which reported holding $55.2 million worth of stock at the end of June. It was followed by D E Shaw with a $31.6 million position. Other investors bullish on the company included Renaissance Technologies, Levin Capital Strategies, and Citadel Investment Group. 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 5.87% of its 13F portfolio. Levin Capital Strategies is also relatively very bullish on the stock, setting aside 1.36 percent of its 13F equity portfolio to CS.

Because Credit Suisse Group AG (NYSE:CS) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there were a few fund managers who sold off their full holdings heading into Q3. Interestingly, John Overdeck and David Siegel’s Two Sigma Advisors cut the biggest position of all the hedgies watched by Insider Monkey, valued at about $2.7 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund sold off about $2.2 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 3 funds heading into Q3.

Let’s now take a look at hedge fund activity in other stocks similar to Credit Suisse Group AG (NYSE:CS). These stocks are ONEOK, Inc. (NYSE:OKE), Yandex NV (NASDAQ:YNDX), CDW Corporation (NASDAQ:CDW), Ryanair Holdings plc (NASDAQ:RYAAY), Fresenius Medical Care AG & Co. KGaA (NYSE:FMS), XP Inc. (NASDAQ:XP), and Northern Trust Corporation (NASDAQ:NTRS). All of these stocks’ market caps are similar to CS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $692 million. That figure was $137 million in CS’s case. Northern Trust Corporation (NASDAQ:NTRS) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. KGaA (NYSE:FMS) is the least popular one with only 5 bullish hedge fund positions. Credit Suisse Group AG (NYSE:CS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CS is 24.9. 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 negative signal and 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately CS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CS investors were disappointed as the stock returned -3.1% since the end of June (through 9/27) 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 most of these stocks already outperformed the market in 2021.

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