5 Stocks Hedge Funds Dumped The Most: Guess How They Performed

1. Citizens Financial Group Inc (NYSE:CFG)

– Number of hedge funds with bullish CFG positions at the end of Q1: 76

– Number of hedge funds with bullish CFG positions at the end of Q2: 38

– Return since June 30th: -15.9%

As mentioned, Citizens Financial Group is a shining example of how valuable elite hedge fund sentiment can be. The previous filing period was the second-straight one in which Citizens Financial Group Inc (NYSE:CFG) experienced a massive swing in sentiment among the investors that we follow, moves which perfectly foreshadowed the resultant performance of the stock over the following quarter. In the first quarter, Citizens Financial Group was a darling of the investors we track, who bought the stock in droves, as a net 46 investors added holdings of the stock to their portfolios during the quarter, far more than any other stock. The stock responded with gains of over 13% during the second quarter.

Yet as we now see, in the span of one quarter Citizens Financial Group Inc (NYSE:CFG) went from the stock funds bought the most, to the one they sold the most, and hedge funds timed their buying and selling perfectly, as shares gave back all of their second quarter gains and then some during the third quarter. Brian Jackelow’s SAB Capital Management pulled this fast entrance and exit off to perfection, opening a 6.5 million-share position in the first quarter, making the stock his top pick as of March 31, and selling it off lock, stock, and barrel in the second quarter. We’ll soon see if hedge funds re-entered the stock once it dipped down to the levels at which they first bought it during the first quarter.

Overall these five stocks that hedge funds dumped the most lost an average of 13.1% between June 30th and October 22nd. S&P 500 Index ETFs returned about 0.2% during the same period. So, hedge funds that were quick on their feet actually avoided a negative alpha of 13.3 percentage points in less than four months.

Disclosure: None