Should I Buy Citrix Systems, Inc. (CTXS)?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Citrix Systems, Inc. (NASDAQ:CTXS) to find out whether there were any major changes in hedge funds’ views.

Citrix Systems, Inc. (NASDAQ:CTXS) has seen an increase in support from the world’s most elite money managers in recent months. Citrix Systems, Inc. (NASDAQ:CTXS) was in 24 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 45. Our calculations also showed that CTXS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Paul Singer of Elliott Management

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 take a look at the fresh hedge fund action regarding Citrix Systems, Inc. (NASDAQ:CTXS).

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

Heading into the fourth quarter of 2021, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from one quarter earlier. By comparison, 31 hedge funds held shares or bullish call options in CTXS a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

The largest stake in Citrix Systems, Inc. (NASDAQ:CTXS) was held by Cantillon Capital Management, which reported holding $277.4 million worth of stock at the end of September. It was followed by D E Shaw with a $177.5 million position. Other investors bullish on the company included Elliott Investment Management, Balyasny Asset Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Jet Capital Investors allocated the biggest weight to Citrix Systems, Inc. (NASDAQ:CTXS), around 2.95% of its 13F portfolio. Cantillon Capital Management is also relatively very bullish on the stock, designating 1.89 percent of its 13F equity portfolio to CTXS.

As one would reasonably expect, key hedge funds were breaking ground themselves. Elliott Investment Management, managed by Paul Singer, created the most valuable position in Citrix Systems, Inc. (NASDAQ:CTXS). Elliott Investment Management had $128.8 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $40.4 million position during the quarter. The other funds with brand new CTXS positions are Matthew Mark’s Jet Capital Investors, John Overdeck and David Siegel’s Two Sigma Advisors, and Suraj Parkash Chopra’s Force Hill Capital Management.

Let’s check out hedge fund activity in other stocks similar to Citrix Systems, Inc. (NASDAQ:CTXS). These stocks are WestRock Company (NYSE:WRK), Farfetch Limited (NYSE:FTCH), American Airlines Group Inc (NASDAQ:AAL), Teck Resources Ltd (NYSE:TECK), Open Text Corporation (NASDAQ:OTEX), Crown Holdings, Inc. (NYSE:CCK), and Athene Holding Ltd. (NYSE:ATH). All of these stocks’ market caps resemble CTXS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 39.6 hedge funds with bullish positions and the average amount invested in these stocks was $1450 million. That figure was $767 million in CTXS’s case. Crown Holdings, Inc. (NYSE:CCK) is the most popular stock in this table. On the other hand Open Text Corporation (NASDAQ:OTEX) is the least popular one with only 20 bullish hedge fund positions. Citrix Systems, Inc. (NASDAQ:CTXS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CTXS is 28.3. 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 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately CTXS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CTXS investors were disappointed as the stock returned -24% since the end of September (through 12/9) 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.

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