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Is CIT Stock A Buy or Sell?

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Asma UL Husna
·5 min read
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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards CIT Group Inc. (NYSE:CIT).

Is CIT stock a buy? CIT Group Inc. (NYSE:CIT) investors should be aware of an increase in activity from the world's largest hedge funds in recent months. CIT Group Inc. (NYSE:CIT) was in 31 hedge funds' portfolios at the end of December. The all time high for this statistic is 43. There were 27 hedge funds in our database with CIT positions at the end of the third quarter. Our calculations also showed that CIT 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.

Peter Rathjens Arrowstreet Capital 394
Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this biotech stock. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 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. Now let's take a look at the recent hedge fund action surrounding CIT Group Inc. (NYSE:CIT).

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

Heading into the first quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the previous quarter. On the other hand, there were a total of 35 hedge funds with a bullish position in CIT a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in CIT Group Inc. (NYSE:CIT) was held by Alua Capital Management, which reported holding $152.7 million worth of stock at the end of December. It was followed by Palestra Capital Management with a $130.2 million position. Other investors bullish on the company included Lakewood Capital Management, First Pacific Advisors LLC, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Alua Capital Management allocated the biggest weight to CIT Group Inc. (NYSE:CIT), around 10.68% of its 13F portfolio. Arctis Global is also relatively very bullish on the stock, earmarking 6.36 percent of its 13F equity portfolio to CIT.

With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. Alua Capital Management, managed by Tom Purcell and Marco Tablada, established the most outsized position in CIT Group Inc. (NYSE:CIT). Alua Capital Management had $152.7 million invested in the company at the end of the quarter. Andrew Immerman and Jeremy Schiffman's Palestra Capital Management also made a $130.2 million investment in the stock during the quarter. The other funds with brand new CIT positions are Quincy Lee's Ancient Art (Teton Capital), Viraj Mehta's Arctis Global, and John Orrico's Water Island Capital.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as CIT Group Inc. (NYSE:CIT) but similarly valued. These stocks are SpringWorks Therapeutics, Inc. (NASDAQ:SWTX), EnerSys (NYSE:ENS), Shake Shack Inc (NYSE:SHAK), Legend Biotech Corporation (NASDAQ:LEGN), Wintrust Financial Corporation (NASDAQ:WTFC), Seaboard Corporation (NYSE:SEB), and Intellia Therapeutics, Inc. (NASDAQ:NTLA). This group of stocks' market caps are closest to CIT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SWTX,22,1254834,6 ENS,24,139316,2 SHAK,25,619287,-1 LEGN,13,334716,0 WTFC,19,137643,-1 SEB,13,111127,-3 NTLA,30,835298,15 Average,20.9,490317,2.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.9 hedge funds with bullish positions and the average amount invested in these stocks was $490 million. That figure was $653 million in CIT's case. Intellia Therapeutics, Inc. (NASDAQ:NTLA) is the most popular stock in this table. On the other hand Legend Biotech Corporation (NASDAQ:LEGN) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks CIT Group Inc. (NYSE:CIT) is more popular among hedge funds. Our overall hedge fund sentiment score for CIT is 80.6. 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. 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 returned 12.2% in 2021 through April 12th but still managed to beat the market by 1.5 percentage points. Hedge funds were also right about betting on CIT as the stock returned 47.2% since the end of December (through 4/12) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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