Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Capital One Financial Corp. (NYSE:COF) based on that data and determine whether they were really smart about the stock.
Is Capital One Financial Corp. (NYSE:COF) the right pick for your portfolio? Investors who are in the know were becoming less confident. The number of long hedge fund positions dropped by 9 lately. Capital One Financial Corp. (NYSE:COF) was in 55 hedge funds’ portfolios at the end of September. The all time high for this statistic is 64. Our calculations also showed that COF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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. With all of this in mind let’s take a look at the latest hedge fund action surrounding Capital One Financial Corp. (NYSE:COF).
Do Hedge Funds Think COF Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 55 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. By comparison, 42 hedge funds held shares or bullish call options in COF a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of Capital One Financial Corp. (NYSE:COF), with a stake worth $879.2 million reported as of the end of September. Trailing Arrowstreet Capital was Fisher Asset Management, which amassed a stake valued at $801 million. Pzena Investment Management, Eagle Capital Management, and Citadel Investment Group 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 Second Curve Capital allocated the biggest weight to Capital One Financial Corp. (NYSE:COF), around 5.67% of its 13F portfolio. No Street Capital is also relatively very bullish on the stock, earmarking 3.57 percent of its 13F equity portfolio to COF.
Judging by the fact that Capital One Financial Corp. (NYSE:COF) has faced falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of funds who sold off their full holdings last quarter. It’s worth mentioning that Steven Richman’s East Side Capital (RR Partners) dropped the largest stake of the 750 funds watched by Insider Monkey, valued at close to $99.6 million in stock. Zach Schreiber’s fund, Point State Capital, also dropped its stock, about $43.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 9 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Capital One Financial Corp. (NYSE:COF). These stocks are Fiserv, Inc. (NASDAQ:FISV), Equinix Inc (NASDAQ:EQIX), Becton, Dickinson and Company (NYSE:BDX), Edwards Lifesciences Corporation (NYSE:EW), Vale SA (NYSE:VALE), DoorDash, Inc. (NYSE:DASH), and CME Group Inc (NASDAQ:CME). All of these stocks’ market caps are closest to COF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FISV | 65 | 3945223 | -7 |
| EQIX | 31 | 1195457 | -2 |
| BDX | 51 | 2339968 | -1 |
| EW | 43 | 2169239 | -4 |
| VALE | 27 | 1979876 | 0 |
| DASH | 42 | 9358288 | -3 |
| CME | 64 | 2686424 | 2 |
| Average | 46.1 | 3382068 | -2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.1 hedge funds with bullish positions and the average amount invested in these stocks was $3382 million. That figure was $4709 million in COF’s case. Fiserv, Inc. (NASDAQ:FISV) is the most popular stock in this table. On the other hand Vale SA (NYSE:VALE) is the least popular one with only 27 bullish hedge fund positions. Capital One Financial Corp. (NYSE:COF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for COF is 58.6. 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 positive signal but 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, COF wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on COF were disappointed as the stock returned -9.1% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.
Follow Capital One Financial Corp (NYSE:COF)
Follow Capital One Financial Corp (NYSE:COF)
Suggested Articles:
- 30 Best Quotes from Warren Buffett
- 15 Biggest Waste Management Companies
- 10 Best Defensive Stocks to Buy Today According to Billionaire Ken Fisher
Disclosure: None. This article was originally published at Insider Monkey.
