4. Credit Suisse Group AG (NYSE: CS)
Number of Hedge Fund Holders: 11
Credit Suisse Group AG (NYSE: CS) is a Switzerland-based global wealth manager founded in 1856. It is placed fourth on our list of top 10 companies bullish on Ethereum. In February 2020, American crypto startup Paxos, in partnership with Credit Suisse, claimed the first live blockchain-based settlement of US equities. The previous year, in February, Credit Suisse Asset Management, owned by the wealth manager, and Portugal-based bank Banco Best successfully processed live end-to-end fund transactions using blockchain technology.
Credit Suisse Group AG (NYSE: CS) has consistently backed blockchain and Ethereum. However, it has had some setbacks of late in the financial services business. In April, the Swiss bank took a $4.7 billion hit from the Archegos disaster and slashed its dividend.
At the end of the fourth quarter of 2020, 11 hedge funds in the database of Insider Monkey held stakes worth $46 million in Credit Suisse Group AG (NYSE: CS), down from 13 in the preceding quarter worth $68 million.
In its Q1 2021 investor letter, Gator Capital Management, an asset management firm, highlighted a few stocks and Credit Suisse Group AG (NYSE: CS) was one of them. Here is what the fund said:
“We were extremely disappointed with the news from Credit Suisse in March. We were blindsided with a double dose of management incompetence. In early March, Credit Suisse announced they were suspending redemptions on the bank’s investment funds related to Greensill’s trade finance business. Then, in late March, the bank announced that it had exposure to the family office Archegos. We believe that of all Wall Street banks, Credit Suisse had the worst response managing the risk presented by Archegos. The combination of these two events in the same month made it clear that the bank does not have adequate risk controls.
We sold our position in Credit Suisse in late March, ending a three-year period of holding shares in the company. Our investment thesis had been Credit Suisse 1) was a global wealth management franchise with an attractive growth rate, 2) had a low-risk, highly profitable domestic Swiss banking franchise, 3) had reduced capital intensity and volatility in the investment bank, and 4) traded for just 75% of tangible book and 8x forward earnings. We believe the bank will be in the penalty box with investors for multiple years due to these risk management failures. We view this situation as similar to Wells Fargo’s account opening scandal from four years ago. Wells Fargo has underperformed the S&P 1500 Financials Index by 95% during that. We believe Credit Suisse’s stock will probably underperform its peers for several years as well.”
