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Author: Don Obrien

Is Citizens Financial Group Inc (CFG) Going to Burn These Hedge Funds?


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 June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Citizens Financial Group Inc (NYSE:CFG) based on those filings.

Citizens Financial Group Inc (NYSE:CFG) was in 36 hedge funds’ portfolios at the end of June. The all time high for this statistic is 67. CFG investors should be aware of a decrease in hedge fund sentiment in recent months. There were 41 hedge funds in our database with CFG positions at the end of the first quarter. Our calculations also showed that CFG isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Billionaire David Siegel's Top 10 Stock Picks

Billionaire David Siegel’s Top 10 Stock Picks

David Siegel of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV 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. Now let’s take a look at the key hedge fund action regarding Citizens Financial Group Inc (NYSE:CFG).

Do Hedge Funds Think CFG Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from one quarter earlier. By comparison, 47 hedge funds held shares or bullish call options in CFG a year ago. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

Is CFG A Good Stock To Buy?

Is CFG A Good Stock To Buy?

The largest stake in Citizens Financial Group Inc (NYSE:CFG) was held by Two Sigma Advisors, which reported holding $50 million worth of stock at the end of June. It was followed by Holocene Advisors with a $45.9 million position. Other investors bullish on the company included AQR Capital Management, Hosking Partners, and Impax Asset Management. In terms of the portfolio weights assigned to each position Soapstone Capital allocated the biggest weight to Citizens Financial Group Inc (NYSE:CFG), around 9.2% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, setting aside 2.59 percent of its 13F equity portfolio to CFG.

Because Citizens Financial Group Inc (NYSE:CFG) has experienced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedge funds that slashed their entire stakes in the second quarter. At the top of the heap, Zach Schreiber’s Point State Capital cut the largest position of all the hedgies followed by Insider Monkey, valued at about $46.2 million in stock, and Daniel Johnson’s Gillson Capital was right behind this move, as the fund dropped about $21.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds in the second quarter.

Let’s go over hedge fund activity in other stocks similar to Citizens Financial Group Inc (NYSE:CFG). We will take a look at Restaurant Brands International Inc (NYSE:QSR), The Cooper Companies, Inc. (NYSE:COO), Essex Property Trust Inc (NYSE:ESS), Teledyne Technologies Incorporated (NYSE:TDY), ORIX Corporation (NYSE:IX), Sun Communities Inc (NYSE:SUI), and Plug Power, Inc. (NASDAQ:PLUG). This group of stocks’ market caps are closest to CFG’s market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QSR,22,2007862,-4 COO,33,1150171,-10 ESS,21,281090,-9 TDY,36,1440654,5 IX,4,4271,-1 SUI,30,821616,-5 PLUG,34,878412,9 Average,25.7,940582,-2.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.7 hedge funds with bullish positions and the average amount invested in these stocks was $941 million. That figure was $402 million in CFG’s case. Teledyne Technologies Incorporated (NYSE:TDY) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 4 bullish hedge fund positions. Citizens Financial Group Inc (NYSE:CFG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CFG is 66.1. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on CFG as the stock returned 6.3% since the end of Q2 (through 10/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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





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Oliver Bolt

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