Before we spend days researching a stock idea we like to take a look at how hedge funds and billionaire investors recently traded that stock. The S&P 500 Index ETF (SPY) lost 8.7% in 2018 through October 26. Forty percent of the S&P 500 constituents are down by more than 10% this year and the average return of a randomly picked stock in the index has lost 9.5%. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 25 most popular S&P 500 stocks among hedge funds had an average loss of 8.8%. In this article, we will take a look at what hedge funds think about Citrix Systems, Inc. (NASDAQ:CTXS).
There has been a small decline in hedge fund ownership of Citrix Systems in 2018, as the stock has continued on its bull run, which has seen shares more than double in value over the past five years. Billionaire activist Paul Singer of Elliott Management remains its biggest bull with a position of 7.09 million shares on June 30. Elliott Management’s Jesse Cohn has been a member of Citrix’s board since July 2015, shortly after the fund took a 7.1% stake in the company and spurred it to sell its GoTo unit. Paul Singer is only one of several billionaire investors that like Citrix, as it just snuck into the top 20 of the 25 Stocks Billionaires Are Piling On.
In the eyes of most shareholders, hedge funds are viewed as underperforming, old financial tools of the past. While there are over 8,000 funds trading at the moment, we look at the moguls of this club, approximately 700 funds. These hedge fund managers manage the lion’s share of the hedge fund industry’s total capital, and by paying attention to their matchless stock picks, Insider Monkey has unsheathed a few investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per annum for a decade in our back tests (see the details here).
Hedge fund activity in Citrix Systems, Inc. (NASDAQ:CTXS)
At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 6% dip from the first quarter of 2018. Hedge fund ownership has remained stable over the past year-and-a-half, as no fewer than 32 funds and no more than 36 were long the stock at the end of any quarter during that time. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Paul Singer’s Elliott Management has the largest position in Citrix Systems, Inc. (NASDAQ:CTXS), worth close to $743.4 million, comprising 3.7% of its total 13F portfolio. On Elliott Management’s heels is D E Shaw, holding a $207.2 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other peers that hold long positions contain Bain Capital’s Brookside Capital, Richard Barrera’s Roystone Capital Partners and Kenneth Squire’s 13D Management.
Since Citrix Systems, Inc. (NASDAQ:CTXS) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedgies that slashed their entire stakes heading into Q3. Interestingly, Noam Gottesman’s GLG Partners sold off the largest position of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $11.6 million in stock. Shawn Bergerson and Martin Kalish’s fund, Waterstone Capital Management, also cut its stock, about $6.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds heading into Q3.
Let’s go over hedge fund activity in other stocks similar to Citrix Systems, Inc. (NASDAQ:CTXS). These stocks are Incyte Corporation (NASDAQ:INCY), ZTO Express (Cayman) Inc. (NYSE:ZTO), ConAgra Foods, Inc. (NYSE:CAG), and Martin Marietta Materials, Inc. (NYSE:MLM). All of these 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 |
|---|---|---|---|
| INCY | 37 | 3208971 | -7 |
| ZTO | 15 | 308178 | 2 |
| CAG | 31 | 1106232 | 2 |
| MLM | 33 | 1854247 | -2 |
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $1.62 billion. That figure was $2.36 billion in CTXS’s case. Incyte Corporation (NASDAQ:INCY) is the most popular stock in this table. On the other hand ZTO Express (Cayman) Inc. (NYSE:ZTO) is the least popular one with only 15 bullish hedge fund positions. Citrix Systems, Inc. (NASDAQ:CTXS) is not the most popular stock in this group but it’s not far off and also has the backing of numerous billionaire investors and activist Paul Singer. However, after its big run over the past five years, including 29% gains in 2018, it might be prudent to wait for a better entry point on this one.
Disclosure: None. This article was originally published at Insider Monkey.
