Is Credit Suisse Group AG (ADR) (NYSE:CS) undervalued? The best stock pickers are taking a bearish view. The number of bullish hedge fund positions stayed the same which is a slightly negative development in our experience
In the financial world, there are dozens of methods shareholders can use to monitor their holdings. A pair of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top fund managers can trounce the broader indices by a solid margin (see just how much).
Just as key, positive insider trading activity is another way to parse down the stock market universe. Obviously, there are many reasons for a bullish insider to cut shares of his or her company, but just one, very clear reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this method if shareholders know where to look (learn more here).
Now, let’s take a gander at the latest action encompassing Credit Suisse Group AG (ADR) (NYSE:CS).
How have hedgies been trading Credit Suisse Group AG (ADR) (NYSE:CS)?
Heading into 2013, a total of 9 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially.
When looking at the hedgies we track, Rob Citrone’s Discovery Capital Management had the biggest position in Credit Suisse Group AG (ADR) (NYSE:CS), worth close to $27.5 million, comprising 0.4% of its total 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Neil Chriss’s Hutchin Hill Capital, Ken Griffin’s Citadel Investment Group and Michael Messner’s Seminole Capital (Investment Mgmt).
Judging by the fact that Credit Suisse Group AG (ADR) (NYSE:CS) has faced a declination in interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedge funds that elected to cut their entire stakes heading into 2013. Interestingly, Israel Englander’s Millennium Management dumped the largest investment of the 450+ funds we key on, worth close to $3.2 million in stock., and Mike Vranos of Ellington was right behind this move, as the fund dumped about $1.1 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading Credit Suisse Group AG (ADR) (NYSE:CS)?
Insider buying is particularly usable when the company in question has experienced transactions within the past six months. Over the latest six-month time period, Credit Suisse Group AG (ADR) (NYSE:CS) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Credit Suisse Group AG (ADR) (NYSE:CS). These stocks are Banco Santander, S.A. (ADR) (NYSE:SAN), UBS AG (USA) (NYSE:UBS), Barclays PLC (ADR) (NYSE:BCS), Lloyds Banking Group PLC (ADR) (NYSE:LYG), and Royal Bank of Scotland Group plc (ADR) (NYSE:RBS). This group of stocks are in the foreign money center banks industry and their market caps resemble CS’s market cap.