Hedge Funds Have Never Been This Bullish On Capital One Financial Corp. (COF)

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Capital One Financial Corp. (NYSE:COF).

Capital One Financial Corp. (NYSE:COF) has seen an increase in hedge fund sentiment of late. Capital One Financial Corp. (NYSE:COF) was in 59 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 56. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 56 hedge funds in our database with COF positions at the end of the fourth quarter. Our calculations also showed that COF isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $29 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a look at the latest hedge fund action surrounding Capital One Financial Corp. (NYSE:COF).

Do Hedge Funds Think COF Is A Good Stock To Buy Now?

At Q1’s end, a total of 59 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in COF over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Capital One Financial Corp. (NYSE:COF) was held by Pzena Investment Management, which reported holding $689.5 million worth of stock at the end of December. It was followed by Eagle Capital Management with a $482.2 million position. Other investors bullish on the company included Fisher Asset Management, D E Shaw, and Adage Capital Management. In terms of the portfolio weights assigned to each position Columbus Hill Capital Management allocated the biggest weight to Capital One Financial Corp. (NYSE:COF), around 5.65% of its 13F portfolio. Castle Hook Partners is also relatively very bullish on the stock, setting aside 4.88 percent of its 13F equity portfolio to COF.

As one would reasonably expect, key money managers were leading the bulls’ herd. Carlson Capital, managed by Clint Carlson, assembled the most valuable position in Capital One Financial Corp. (NYSE:COF). Carlson Capital had $15.7 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also initiated a $8.3 million position during the quarter. The following funds were also among the new COF investors: Gregg Moskowitz’s Interval Partners, Benjamin A. Smith’s Laurion Capital Management, and Israel Englander’s Millennium Management.

Let’s now take a look at hedge fund activity in other stocks similar to Capital One Financial Corp. (NYSE:COF). We will take a look at Twilio Inc. (NYSE:TWLO), Takeda Pharmaceutical Company Limited (NYSE:TAK), Bank of Montreal (NYSE:BMO), Analog Devices, Inc. (NASDAQ:ADI), Illumina, Inc. (NASDAQ:ILMN), The Progressive Corporation (NYSE:PGR), and Moody’s Corporation (NYSE:MCO). This group of stocks’ market valuations match COF’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 47.9 hedge funds with bullish positions and the average amount invested in these stocks was $4039 million. That figure was $3140 million in COF’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Bank of Montreal (NYSE:BMO) is the least popular one with only 15 bullish hedge fund positions. Capital One Financial Corp. (NYSE:COF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for COF is 64.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on COF as the stock returned 26.6% since the end of Q1 (through 6/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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