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 first 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 4.5 years and analyze what the smart money thinks of Credit Suisse Group AG (NYSE:CS) based on that data and determine whether they were really smart about the stock.
Credit Suisse Group AG (NYSE:CS) has experienced an increase in enthusiasm from smart money of late. CS was in 11 hedge funds' portfolios at the end of the first quarter of 2020. There were 10 hedge funds in our database with CS holdings at the end of the previous quarter. Our calculations also showed that CS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
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 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_27676" align="aligncenter" width="355"] Israel Englander of Millennium Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to go over the key hedge fund action surrounding Credit Suisse Group AG (NYSE:CS).
How have hedgies been trading Credit Suisse Group AG (NYSE:CS)?
Heading into the second quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CS over the last 18 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Credit Suisse Group AG (NYSE:CS), which was worth $80.3 million at the end of the third quarter. On the second spot was Orbis Investment Management which amassed $16 million worth of shares. PEAK6 Capital Management, D E Shaw, and Masters Capital Management 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 Springhouse Capital Management allocated the biggest weight to Credit Suisse Group AG (NYSE:CS), around 8.78% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, dishing out 0.29 percent of its 13F equity portfolio to CS.
As one would reasonably expect, some big names have jumped into Credit Suisse Group AG (NYSE:CS) headfirst. D E Shaw, managed by D. E. Shaw, established the biggest position in Credit Suisse Group AG (NYSE:CS). D E Shaw had $8.6 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also made a $1.3 million investment in the stock during the quarter. The following funds were also among the new CS investors: Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Ran Pang's Quantamental Technologies.
Let's now review hedge fund activity in other stocks similar to Credit Suisse Group AG (NYSE:CS). We will take a look at Fresenius Medical Care AG & Co. KGaA (NYSE:FMS), Trane Technologies plc (NYSE:TT), Cerner Corporation (NASDAQ:CERN), and Barclays PLC (NYSE:BCS). This group of stocks' market valuations match CS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FMS,10,16944,-1 TT,36,615498,36 CERN,41,1005893,7 BCS,13,33314,2 Average,25,417912,11 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $418 million. That figure was $134 million in CS's case. Cerner Corporation (NASDAQ:CERN) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. (NYSE:FMS) is the least popular one with only 10 bullish hedge fund positions. Credit Suisse Group AG (NYSE:CS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on CS as the stock returned 28.6% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.