The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 752 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article we look at what those investors think of Citizens Financial Group Inc (NYSE:CFG).
Citizens Financial Group Inc (NYSE:CFG) was in 38 hedge funds' portfolios at the end of September. CFG has experienced a decrease in enthusiasm from smart money of late. There were 39 hedge funds in our database with CFG holdings at the end of the previous quarter. Our calculations also showed that CFG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_339739" align="aligncenter" width="450"] Ricky Sandler of Eminence Capital[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a gander at the key hedge fund action encompassing Citizens Financial Group Inc (NYSE:CFG).
What does smart money think about Citizens Financial Group Inc (NYSE:CFG)?
At the end of the third quarter, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the second quarter of 2019. By comparison, 42 hedge funds held shares or bullish call options in CFG a year ago. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, Arrowstreet Capital held the most valuable stake in Citizens Financial Group Inc (NYSE:CFG), which was worth $262.7 million at the end of the third quarter. On the second spot was Millennium Management which amassed $169.9 million worth of shares. Citadel Investment Group, Eminence Capital, and AQR 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 EJF Capital allocated the biggest weight to Citizens Financial Group Inc (NYSE:CFG), around 6.22% of its portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, setting aside 5.64 percent of its 13F equity portfolio to CFG.
Since Citizens Financial Group Inc (NYSE:CFG) has witnessed falling interest from hedge fund managers, it's easy to see that there was a specific group of hedge funds that decided to sell off their full holdings by the end of the third quarter. It's worth mentioning that Dmitry Balyasny's Balyasny Asset Management dropped the biggest investment of the 750 funds monitored by Insider Monkey, comprising close to $33 million in stock, and Michael Kharitonov and Jon David McAuliffe's Voleon Capital was right behind this move, as the fund said goodbye to about $6.2 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Citizens Financial Group Inc (NYSE:CFG) but similarly valued. These stocks are WPP plc (NYSE:WPP), Regions Financial Corporation (NYSE:RF), Amcor plc (NYSE:AMCR), and Teleflex Incorporated (NYSE:TFX). This group of stocks' market values resemble CFG's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WPP,3,41384,0 RF,23,502597,-9 AMCR,16,131192,4 TFX,26,767534,1 Average,17,360677,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $361 million. That figure was $1571 million in CFG's case. Teleflex Incorporated (NYSE:TFX) is the most popular stock in this table. On the other hand WPP plc (NYSE:WPP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Citizens Financial Group Inc (NYSE:CFG) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on CFG, though not to the same extent, as the stock returned 9.8% during the fourth quarter (through the end of November) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.