Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 823 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Citrix Systems, Inc. (NASDAQ:CTXS).
Is Citrix Systems, Inc. (NASDAQ:CTXS) ready to rally soon? Money managers were cutting their exposure. The number of long hedge fund positions retreated by 2 in recent months. Citrix Systems, Inc. (NASDAQ:CTXS) was in 36 hedge funds' portfolios at the end of June. The all time high for this statistics is 45. Our calculations also showed that CTXS isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 38 hedge funds in our database with CTXS positions at the end of the first quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are viewed as slow, outdated investment vehicles of years past. While there are more than 8000 funds trading today, We hone in on the elite of this group, approximately 850 funds. These hedge fund managers control the lion's share of all hedge funds' total capital, and by tailing their first-class equity investments, Insider Monkey has figured out a few investment strategies that have historically outstripped the broader indices. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Nick Thakore of Diametric Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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 to get excerpts of these letters in your inbox. Now let's take a glance at the latest hedge fund action encompassing Citrix Systems, Inc. (NASDAQ:CTXS).
Hedge fund activity in Citrix Systems, Inc. (NASDAQ:CTXS)
At the end of the second quarter, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. By comparison, 34 hedge funds held shares or bullish call options in CTXS a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in Citrix Systems, Inc. (NASDAQ:CTXS) was held by SRS Investment Management, which reported holding $548.2 million worth of stock at the end of June. It was followed by Alyeska Investment Group with a $72 million position. Other investors bullish on the company included Renaissance Technologies, Point72 Asset Management, and Jericho Capital Asset Management. In terms of the portfolio weights assigned to each position SRS Investment Management allocated the biggest weight to Citrix Systems, Inc. (NASDAQ:CTXS), around 10.21% of its 13F portfolio. JS Capital is also relatively very bullish on the stock, setting aside 2.73 percent of its 13F equity portfolio to CTXS.
Judging by the fact that Citrix Systems, Inc. (NASDAQ:CTXS) has experienced bearish sentiment from hedge fund managers, logic holds that there was a specific group of hedge funds that elected to cut their full holdings by the end of the second quarter. Intriguingly, Matt Sirovich and Jeremy Mindich's Scopia Capital cut the largest stake of the 750 funds tracked by Insider Monkey, comprising about $123.5 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also dropped its stock, about $25.1 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds by the end of the second quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Citrix Systems, Inc. (NASDAQ:CTXS) but similarly valued. These stocks are First Republic Bank (NYSE:FRC), Paycom Software Inc (NYSE:PAYC), Yum China Holdings, Inc. (NYSE:YUMC), DISH Network Corp. (NASDAQ:DISH), Chewy, Inc. (NYSE:CHWY), Delta Air Lines, Inc. (NYSE:DAL), and Fortis Inc. (NYSE:FTS). All of these stocks' market caps are similar to CTXS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FRC,37,1192635,9 PAYC,36,503943,6 YUMC,35,839761,11 DISH,54,1703499,10 CHWY,44,569875,8 DAL,39,864778,-14 FTS,8,379313,-7 Average,36.1,864829,3.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.1 hedge funds with bullish positions and the average amount invested in these stocks was $865 million. That figure was $1146 million in CTXS's case. DISH Network Corp. (NASDAQ:DISH) is the most popular stock in this table. On the other hand Fortis Inc. (NYSE:FTS) is the least popular one with only 8 bullish hedge fund positions. Citrix Systems, Inc. (NASDAQ:CTXS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CTXS is 57.4. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 23% in 2020 through October 30th and surpassed the market again by 20.1 percentage points. Unfortunately CTXS wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CTXS investors were disappointed as the stock returned -23.2% since the end of June (through 10/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.