Legendary investors such as Jeffrey Talpins and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Citrix Systems, Inc. (NASDAQ:CTXS) from the perspective of those elite funds.
Citrix Systems, Inc. (NASDAQ:CTXS) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 34 hedge funds’ portfolios at the end of the second quarter of 2019. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as IDEX Corporation (NYSE:IEX), Yandex NV (NASDAQ:YNDX), and Conagra Brands, Inc. (NYSE:CAG) to gather more data points. Our calculations also showed that CTXS isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the latest hedge fund action regarding Citrix Systems, Inc. (NASDAQ:CTXS).
What does smart money think about Citrix Systems, Inc. (NASDAQ:CTXS)?
At Q2’s end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CTXS over the last 16 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Among these funds, Elliott Management held the most valuable stake in Citrix Systems, Inc. (NASDAQ:CTXS), which was worth $597.8 million at the end of the second quarter. On the second spot was GLG Partners which amassed $253.5 million worth of shares. Moreover, Farallon Capital, D E Shaw, and Citadel Investment Group were also bullish on Citrix Systems, Inc. (NASDAQ:CTXS), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Citrix Systems, Inc. (NASDAQ:CTXS) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of money managers that elected to cut their positions entirely last quarter. Interestingly, Ken Griffin’s Citadel Investment Group sold off the largest position of the 750 funds tracked by Insider Monkey, comprising about $62.7 million in stock. D. E. Shaw’s fund, D E Shaw, also sold off its stock, about $28.4 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Citrix Systems, Inc. (NASDAQ:CTXS). We will take a look at IDEX Corporation (NYSE:IEX), Yandex NV (NASDAQ:YNDX), Conagra Brands, Inc. (NYSE:CAG), and PagSeguro Digital Ltd. (NYSE:PAGS). All of these stocks’ market caps match CTXS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IEX | 15 | 374953 | -1 |
| YNDX | 30 | 826000 | 0 |
| CAG | 24 | 608316 | -9 |
| PAGS | 30 | 1381371 | 0 |
| Average | 24.75 | 797660 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $798 million. That figure was $2028 million in CTXS’s case. Yandex NV (NASDAQ:YNDX) is the most popular stock in this table. On the other hand IDEX Corporation (NYSE:IEX) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Citrix Systems, Inc. (NASDAQ:CTXS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CTXS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CTXS were disappointed as the stock returned -1.3% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
