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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Citigroup Inc. (NYSE:C) based on those filings.
Citigroup Inc. (NYSE:C) was in 90 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 121. C investors should pay attention to a decrease in hedge fund interest recently. There were 95 hedge funds in our database with C holdings at the end of December. Our calculations also showed that C ranked 29th among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Richard S. Pzena of Pzena Investment Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. We go through lists like the 10 best hydrogen fuel cell 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. 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 homepage. Keeping this in mind let's review the key hedge fund action regarding Citigroup Inc. (NYSE:C).
Do Hedge Funds Think C Is A Good Stock To Buy Now?
At first quarter's end, a total of 90 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the fourth quarter of 2020. On the other hand, there were a total of 86 hedge funds with a bullish position in C 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.
More specifically, ValueAct Capital was the largest shareholder of Citigroup Inc. (NYSE:C), with a stake worth $1580.4 million reported as of the end of March. Trailing ValueAct Capital was Eagle Capital Management, which amassed a stake valued at $1508.4 million. Pzena Investment Management, First Pacific Advisors LLC, 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 ValueAct Capital allocated the biggest weight to Citigroup Inc. (NYSE:C), around 18.44% of its 13F portfolio. Oldfield Partners is also relatively very bullish on the stock, designating 11.74 percent of its 13F equity portfolio to C.
Judging by the fact that Citigroup Inc. (NYSE:C) has faced a decline in interest from the smart money, it's safe to say that there is a sect of fund managers that slashed their entire stakes in the first quarter. It's worth mentioning that Edgar Wachenheim's Greenhaven Associates sold off the largest stake of the 750 funds followed by Insider Monkey, worth about $286.7 million in stock, and Suzi Nutton (CEO)'s Lansdowne Partners was right behind this move, as the fund dropped about $73.5 million worth. These moves are interesting, as total hedge fund interest dropped by 5 funds in the first quarter.
Let's check out hedge fund activity in other stocks similar to Citigroup Inc. (NYSE:C). We will take a look at Royal Dutch Shell plc (NYSE:RDS), Honeywell International Inc. (NASDAQ:HON), QUALCOMM, Incorporated (NASDAQ:QCOM), The Boeing Company (NYSE:BA), NextEra Energy, Inc. (NYSE:NEE), United Parcel Service, Inc. (NYSE:UPS), and Union Pacific Corporation (NYSE:UNP). All of these stocks' market caps are similar to C's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RDS,36,2190186,2 HON,56,1731346,11 QCOM,73,2765985,-12 BA,59,1437584,4 NEE,63,2725995,2 UPS,44,1346598,-4 UNP,75,4685045,7 Average,58,2411820,1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 58 hedge funds with bullish positions and the average amount invested in these stocks was $2412 million. That figure was $6938 million in C's case. Union Pacific Corporation (NYSE:UNP) is the most popular stock in this table. On the other hand Royal Dutch Shell plc (NYSE:RDS) is the least popular one with only 36 bullish hedge fund positions. Compared to these stocks Citigroup Inc. (NYSE:C) is more popular among hedge funds. Our overall hedge fund sentiment score for C is 72.3. 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. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Unfortunately C wasn't nearly as popular as these 5 stocks and hedge funds that were betting on C were disappointed as the stock returned 5.9% since the end of the first quarter (through 6/11) 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 since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.