Is Lloyds Banking Group PLC (ADR) (LYG) Going to Burn These Hedge Funds?

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Due to the fact that Lloyds Banking Group PLC (ADR) (NYSE:LYG) has experienced a declining sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of money managers that decided to sell off their full holdings by the end of the third quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest investment of all the hedgies monitored by Insider Monkey, worth about $1.6 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also cut its stock, about $0.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Lloyds Banking Group PLC (ADR) (NYSE:LYG). These stocks are BHP Billiton plc (ADR) (NYSE:BBL), AstraZeneca plc (ADR) (NYSE:AZN), Royal Bank of Canada (USA) (NYSE:RY), and United Technologies Corporation (NYSE:UTX). This group of stocks’ market valuations match LYG’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BBL 4 82863 -2
AZN 18 401752 -2
RY 17 504408 -4
UTX 48 2745803 -9

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $934 million, considerably higher than the $403 million in LYG’s case. United Technologies Corporation (NYSE:UTX) is the most popular stock in this table, while BHP Billiton plc (ADR) (NYSE:BBL) is the least popular one with only 4 bullish hedge fund positions. Lloyds Banking Group PLC (ADR) (NYSE:LYG) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard UTX might be a better candidate to consider a long position.

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