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2019 Review: Most Favored Hedge Fund Stocks vs. Citizens Financial Group Inc (CFG)

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds. What do these smart investors think about Citizens Financial Group Inc (NYSE:CFG)?

Citizens Financial Group Inc (NYSE:CFG) has seen a decrease in activity from the world’s largest hedge funds of late. Our calculations also showed that CFG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

In the 21st century investor’s toolkit there are a multitude of indicators market participants put to use to analyze publicly traded companies. Some of the less known indicators are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite money managers can beat the S&P 500 by a very impressive amount (see the details here).

Izzy Englander of MILLENNIUM MANAGEMENT

Israel Englander of Millennium Management

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind let’s take a glance at the key hedge fund action encompassing Citizens Financial Group Inc (NYSE:CFG).

What does smart money think about Citizens Financial Group Inc (NYSE:CFG)?

At the end of the third quarter, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from one quarter earlier. By comparison, 42 hedge funds held shares or bullish call options in CFG a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is CFG A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Citizens Financial Group Inc (NYSE:CFG). Arrowstreet Capital has a $262.7 million position in the stock, comprising 0.6% of its 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $169.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism encompass Ken Griffin’s Citadel Investment Group, Ricky Sandler’s Eminence Capital and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to Citizens Financial Group Inc (NYSE:CFG), around 6.22% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, earmarking 5.64 percent of its 13F equity portfolio to CFG.

Seeing as Citizens Financial Group Inc (NYSE:CFG) has experienced bearish sentiment from the smart money, it’s easy to see that there was a specific group of fund managers who sold off their positions entirely last quarter. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest position of the 750 funds tracked by Insider Monkey, valued at about $33 million in stock, and Michael Kharitonov and Jon David McAuliffe’s Voleon Capital was right behind this move, as the fund sold off about $6.2 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Citizens Financial Group Inc (NYSE:CFG). These stocks are Wausau Paper Corp. (NYSE:WPP), Regions Financial Corporation (NYSE:RF), Amcor plc (NYSE:AMCR), and Teleflex Incorporated (NYSE:TFX). This group of stocks’ market valuations match CFG’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WPP 3 41384 0
RF 23 502597 -9
AMCR 16 131192 4
TFX 26 767534 1
Average 17 360677 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $361 million. That figure was $1571 million in CFG’s case. Teleflex Incorporated (NYSE:TFX) is the most popular stock in this table. On the other hand Wausau Paper Corp. (NYSE:WPP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Citizens Financial Group Inc (NYSE:CFG) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on CFG as the stock returned 41.2% so far in 2019 (through 12/23) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Disclosure: None. This article was originally published at Insider Monkey.

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