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Oakmark Select Fund: ‘Citigroup (C) Remained Profitable Amidst the Pandemic’

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Jose Karlo Mari Tottoc
·3 min read
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Oakmark Select Fund, an investment advisory firm that provides asset and wealth management published its third-quarter 2020 Investor Letter – a copy of which can be seen here. A return of 5.2% was recorded by the fund for the 3rd Quarter of 2020, trailing below its S&P 500 benchmark that returned 8.9%. You can view the fund’s top 10 holdings to have a peek at their top bets for 2021.

Oakmark Select Fund, in their Q3 2020 Investor Letter said that they were able to distinguish a value in Citigroup Inc. (NYSE: C) and still maintains their position in the company even after a bad performance during the pandemic. Citigroup Inc. is a global investment bank and financial services corporation that currently has a $133.727 billion market cap. For the past 3 months, C delivered a 48.71% return and settled at $64.23 per share at the closing of January 15th.

Here is what Oakmark Select Fund has to say about Citigroup Inc. in their Investor Letter:

"Citigroup was our largest detractor for the period due to Covid-19-related concerns that have hurt the entire financial sector, as well as a handful of Citigroup-specific headlines that amplified near-term uncertainty. We believe that investors’ short-term focus can cause them to miss the bigger picture. The company has remained profitable throughout the Covid-19 crisis to date. It continues to operate with significant excess capital relative to regulatory minimums, even as it has added more than $10.5B to credit reserves year to date. We believe the company is proving its resilience during a real-life stress test. Yet, despite this positive early evidence, Citigroup currently trades at only 60% of tangible book value and slightly over 5x 2019 earnings per share. Given that we think the company’s normalized earnings power is greater than what it achieved in 2019, we find these valuation metrics especially attractive. As we move beyond the pandemic, we think investors’ focus will shift to the underlying quality of the business and they will value the resilience Citigroup demonstrated during this crisis."

Citigroup Inc (NYSE:C), Citi, Sign, building, Logo, Symbol
Citigroup Inc (NYSE:C), Citi, Sign, building, Logo, Symbol

Kiev.Victor / Shutterstock.com

Last November 2020, we published an article telling that Citigroup Inc. (NYSE: C) was in 91 hedge funds’ portfolio. Its all time high statistics is 121. Citigroup Inc. delivered a 4.17% return YTD.

Our calculations showed that Citigroup Inc. (NYSE: C) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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.

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

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