Brian Jackelow‘s SAB Capital Management is an event driven fund that employs both long and short term strategies in its investment activities, focusing on equity markets. In its latest 13F with the U.S. Securities and Exchange Commission, SAB disclosed an equity portfolio of $1.02 billion as of the end of March. What was interesting from SAB’s filing is its largest holding, which is a new position in Citizens Financial Group Inc (NYSE:CFG). The company witnessed a significant increase of bullish sentiment from the hedge funds we track. In this way, at the end of March, a total of 76 funds held a total of $2.33 billion worth of Citizens’ stock, up from 30 funds with $1.17 billion worth of stock a quarter earlier. Let’s take a look at SAB’s new picks, which aside from Citizens Financial Group, also include Endurance International Group Hldgs Inc (NASDAQ:EIGI), and Travelport Worldwide Ltd (NYSE:TVPT).
A point to note is that we don’t just track the latest moves of funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research, with backtests for the period between 1999 and 2012 and forward testing for the last 2.5 years. The results of our analysis show that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests. Moreover, since the beginning of forward testing in August 2012, the strategy worked brilliantly, outperforming the market every year and returning 144%, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
Let’s start with Citizens Financial Group Inc (NYSE:CFG), in which SAB owns 6.5 million shares valued at $156.85 million. As it has been stated earlier, Citizens gained a significant popularity among the funds we track, and one of the reasons believed to have played a role in this activity was the expiry of the stock’s initial public offering lockup on March 23. Other funds that opened new positions in Citizens Financial Group Inc (NYSE:CFG) include John Khoury‘s Long Pond Capital, Thomas Ellis and Todd Hammer’s North Run Capital and billionaire Daniel S. Och’s Oz Management.