How This Fund’s Investments in Citigroup Inc. (C), Bank of America Corp (BAC) & Other Stocks Played Out

Hedge funds’ returns are declining mainly due to the losses returned from short positions. Our research has proved that long sides of the smart money’s portfolios still beat the market. For example, 627 of the 660 funds in our database posted 8.3% gains in the third-quarter based on the size of their positions on June 30. That easily bested the performance of S&P 500 ETFs, which returned only 3.3% for the period. That’s why we recommend investors consider hedge funds’ top long bets and share them with readers.

Algebris Investments is a London-based hedge fund run by Eric Halet and Davide Serra. Algebris’ equity portfolio has a value of over $570.40 million as of the end of the third quarter. The fund invests mainly in the financial sector and, according to our calculations, it returned 11.56% from its 37 long positions in companies worth over $1.0 billion in the third quarter. Four of these long positions are in Citigroup Inc. (NYSE:C), Bank of America Corp (NYSE:BAC), Lazard Ltd (NYSE:LAZ) and Carlyle Group LP (NASDAQ:CG). 

Algebris Investments upped its stake in Citigroup Inc. (NYSE:C) by 10% in the third quarter, ending the period with 302,518 shares worth $14.28 million.  The stock gained 11.8% during the third quarter. Heading into the third quarter of 2016, 97 funds tracked by Insider Monkey were long this stock, down by 4% from one quarter earlier. The largest stake in Citigroup Inc. (NYSE:C) was held by Eagle Capital Management, which reported holding $1.14 billion worth of stock as of the end of June. It was followed by First Pacific Advisors LLC with a $621 million position. Other investors bullish on the company included Hound Partners, Fisher Asset Management, and Greenhaven Associates.

In Bank of America Corp (NYSE:BAC), Algebris amassed 734,088 shares valued at $9.71 million at the end of September, as the stock advanced by 18.5% during the third quarter. Overall, there were 102 funds from our database bullish on Bank of America Corp (NYSE:BAC)’s stock at the end of June, down by eight over the quarter. Among these funds, Fisher Asset Management held the most valuable stake in Bank of America Corp (NYSE:BAC), which was worth $571.5 million at the end of the second quarter. On the second spot was Eagle Capital Management, which amassed $448 million worth of shares. Moreover, First Pacific Advisors LLC, Pzena Investment Management, and D E Shaw were also bullish on Bank of America Corp (NYSE:BAC).

On the other hand, Algebris Investments cut its position in Lazard Ltd (NYSE:LAZ) by 64% to 82,492 shares worth $2.99 million durign the third quarter. The stake was cut as the stock gained 23.5% between July and September. During the second quarter, the number of funds followed by us holding shares of Lazard Ltd (NYSE:LAZ) went up to 18 from 16. Among the investors in our database, Ariel Investments held the most valuable stake in Lazard Ltd (NYSE:LAZ), which was worth $194.7 million at the end of the second quarter. On the second spot was Fisher Asset Management which amassed $57.8 million worth of shares. Moreover, Royce & Associates, Two Sigma Advisors, and Polar Capital were also bullish on Lazard Ltd (NYSE:LAZ).

Carlyle Group LP (NASDAQ:CG) is another company that saw Algebris Investments cut its exposure during the third quarter, as the stock inched down by 0.2%. In its latest 13F, the fund reported a $4.69 million position containing 301,381 shares, down by 24% over the quarter. The company was included in the equity portfolios of 10 funds tracked by us at the end of June and the largest stake was held by Okumus Fund Management, which amassed $81.1 million worth of stock at the end of June. The second most bullish fund manager was Hawkins Capital, which held a $11.1 million position. Other peers with similar optimism included  Markel Gayner Asset Management and Royce & Associates.

Disclosure: none