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Royal Bank of Scotland Group plc (RBS) Making Big Gains After Bank of America (BAC) Cleared of Fraud

Shares of Royal Bank of Scotland Group PLC (NYSE:RBS) are rising high on Tuesday after a civil lawsuit against Bank of America Corp (NYSE:BAC) was overturned yesterday. Shares of RBS are up by 5.5%, while BAC’s shares are up by 1.6% following the ruling by The 2nd U.S. Circuit Court of Appeal in Manhattan. The news is good for RBS, which is also facing a civil lawsuit on the same allegations that it mislead investors regarding the quality of mortgage-backed securities. General strength in the European markets, which hit a six-week high today, has also helped push RBS higher today. On the other hand, a U.S. appeals court decided on Monday to reinstate the antitrust lawsuits filed against 16 big banks regarding rigging Libor interest rates. The lawsuits accuse major banks, including Royal Bank of Scotland Group, of manipulating the London interbank offered rate, or Libor, to rip off their customers.

Royal Bank of Scotland Group plc (NYSE:RBS) was in 10 hedge funds’ portfolios at the end of the first quarter of 2016. RBS has seen an increase in hedge fund sentiment in recent months. There were 8 hedge funds in our database with RBS positions at the end of the previous quarter.

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We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).

According to Insider Monkey’s hedge fund database, Frank Brosens’ Taconic Capital has the number one position in Royal Bank of Scotland Group plc (NYSE:RBS), worth close to $17.6 million, accounting for 0.8% of its total 13F portfolio. Sitting at the No. 2 spot is Eric Halet and Davide Serra of Algebris Investments, with a $9.8 million position; 3.6% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions encompass Jim Simons’ Renaissance Technologies and Gifford Combs’ Dalton Investments.

Consequently, key hedge funds have jumped into Royal Bank of Scotland Group plc (NYSE:RBS) headfirst. PDT Partners, managed by Peter Muller, established the most valuable position in Royal Bank of Scotland Group plc (NYSE:RBS). PDT Partners had $2.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $1.7 million investment in the stock during the quarter. The other funds with new positions in the stock are David Costen Haley’s HBK Investments and Matthew Tewksbury’s Stevens Capital Management.

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