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Elite Hedgies Are Abandoning Royal Bank of Scotland Group plc (ADR) (RBS)

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Before we spend many hours researching a company, we like to analyze what hedge funds and billionaire investors think of the stock first. We like to do so because elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among the hedge funds in our database at the end of September 2014 yielded an average return of 9.5% during the last 12 months, ending October 31. 63% of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell by 50% and 26% respectively during the same time period, the top hedge fund consensus picks work more often than not. In the following paragraphs, we find out what the investors and hedge funds that we track think of Royal Bank of Scotland Group plc (ADR) (NYSE:RBS).

Top money managers were extremely bearish towards Royal Bank of Scotland Group in the third quarter. It wasn’t a great quarter for the stock, which declined by 14%. However, there was a flight of capital from it that far exceeded that, as the number of investors in our database long the stock fell by over 50% to 6, while the value of their positions crumbled by 91%, falling to just $8.0 million as hedgies fled from the stock. At the end of this article we will also compare RBS to other stocks including Express Scripts Holding Company (NASDAQ:ESRX), Twenty-First Century Fox Inc (NASDAQ:FOX), and ING Groep N.V. (ADR) (NYSE:ING) to get a better sense of its popularity.

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Today there are a multitude of signals stock market investors use to appraise publicly traded companies. A couple of the most innovative signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can outclass their index-focused peers by a very impressive amount (see the details here).

Now, we’re going to take a peek at the fresh action surrounding Royal Bank of Scotland Group plc (ADR) (NYSE:RBS).

Hedge fund activity in Royal Bank of Scotland Group plc (ADR) (NYSE:RBS)

Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 54% plummet from the second quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or had already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Gifford Combs’ Dalton Investments has the largest position in Royal Bank of Scotland Group plc (ADR) (NYSE:RBS), worth close to $2.8 million, amounting to 1.4% of its total 13F portfolio. Sitting in the No. 2 spot is Matthew Hulsizer of PEAK6 Capital Management, with a $1.4 million positions of shares underlying call options; less than 0.1% of its 13F portfolio is allocated to the holding. Remaining members of the smart money that hold long positions include Renaissance Technologies, and Michael Hintze’s CQS Cayman LP.

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