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5 Finance-Related Stocks Hedge Funds Dumped Like Crazy in Q3

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The financial sector is getting a lot of attention post Trump’s victory as it is expected that his administration will have a positive effect on the companies. The Financial Select Sector SPDR Fund (NYSEARCA:XLF) has yielded a double digit percentage return over the last month, significantly outperforming the broader Dow Jones index. Investors in bank stocks are bullish as they think that a more business friendly political climate and lighter regulatory rules will be favorable for these stocks. An upcoming interest rate hike by the Federal Reserve should also boost the prospects for the financial stocks. That being said, some analysts think that the market rally is overdone as some of Trump’s campaign promises like trade restrictions might be negative for the financial sector. In this article, we look at 5 finance stocks that hedge funds dumped during the last quarter.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

U.S. Financial Hub: Wall Street

Synchrony Financial (NYSE:SYF) is a $29 billion consumer financial service company that provides a range of credit programs. Barry Rosenstein‘s Jana Partners was one of the biggest sellers of this stock during the third quarter, exiting its position in the stock entirely, by selling 4.4 million shares which comprised 1.9% of its portfolio value. Some of the other hedge funds which completely sold all their shares of Synchrony Financial (NYSE:SYF) included Appaloosa Management, Mik Capital and Arrowstreet Capital. Though the smart money is bearish on this stock, sell side analysts are overwhelmingly bullish with a whopping 19 out of the 21 analysts covering this stock rating it as a buy. The reason for their bullish stance may be due to the company beating market expectations by posting 69 cents of profit per share during the third quarter, compared to an average analyst estimate of 66 cents per share. The number of funds from our database having Synchrony Financial (NYSE:SYF) in their portfolios came down to 48 during the third quarter from 60 in the quarter earlier.

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