Is CFG Stock A Buy or Sell?

In this article we will take a look at whether hedge funds think Citizens Financial Group Inc (NYSE:CFG) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is CFG stock a buy or sell? Citizens Financial Group Inc (NYSE:CFG) has experienced an increase in enthusiasm from smart money lately. Citizens Financial Group Inc (NYSE:CFG) was in 38 hedge funds’ portfolios at the end of the fourth quarter of 2020. 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 Q4 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 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Robert Pohly of Samlyn Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. With all of this in mind we’re going to take a gander at the key hedge fund action encompassing Citizens Financial Group Inc (NYSE:CFG).

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

Heading into the first quarter of 2021, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in CFG over the last 22 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Arrowstreet Capital held the most valuable stake in Citizens Financial Group Inc (NYSE:CFG), which was worth $83 million at the end of the fourth quarter. On the second spot was Samlyn Capital which amassed $47.9 million worth of shares. Millennium Management, Two Sigma Advisors, and Basswood Capital 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 9.16% of its 13F portfolio. Elm Ridge Capital is also relatively very bullish on the stock, setting aside 3.54 percent of its 13F equity portfolio to CFG.

As aggregate interest increased, specific money managers were leading the bulls’ herd. Samlyn Capital, managed by Robert Pohly, established the most outsized position in Citizens Financial Group Inc (NYSE:CFG). Samlyn Capital had $47.9 million invested in the company at the end of the quarter. Renaissance Technologies also made a $4.4 million investment in the stock during the quarter. The other funds with brand new CFG positions are Ray Dalio’s Bridgewater Associates, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Allon Hellmann’s Full18 Capital.

Let’s also examine 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 10x Genomics, Inc. (NASDAQ:TXG), Celanese Corporation (NYSE:CE), NVR, Inc. (NYSE:NVR), Cheniere Energy, Inc. (NYSE:LNG), Domino’s Pizza, Inc. (NYSE:DPZ), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), and Suzano S.A. (NYSE:SUZ). All of these stocks’ market caps are closest to CFG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.1 hedge funds with bullish positions and the average amount invested in these stocks was $1069 million. That figure was $454 million in CFG’s case. NVR, Inc. (NYSE:NVR) is the most popular stock in this table. On the other hand Suzano S.A. (NYSE:SUZ) is the least popular one with only 6 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 64. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on CFG as the stock returned 25.9% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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