Here’s Why Artisan Value Fund Sold Citigroup Inc. (C)

Artisan Partners Limited Partnership, a high value-added investment management firm, published its ‘Artisan Value Fund’ fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 20% was recorded by its Investor Class: ARTLX, 20.05% by its Advisor Class: APDLX, and 20.07% by its Institutional Class: APHLX, in the fourth quarter of 2020, all outperformed its Russell 1000 Value Benchmark that delivered a 16.25% return and its Russel 1000 Index that was up by 13.69% in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Artisan Value Fund, in their Q4 2020 investor letter, mentioned Citigroup Inc. (NYSE: C) and emphasized their views on the company. Citigroup Inc. is a New York-based investment banking company that currently has a $152.3 billion market capitalization. Since the beginning of the year, Citigroup delivered an 18.41% return, extending its 12-month gains to 91.83%. As of March 18, 2021, the stock closed at $73.84 per share.

Here is what Artisan Value Fund has to say about Citigroup Inc. in their Q4 2020 investor letter:

“We fully exited position in Citigroup. Global financial services company Citigroup made a $900 million clerical error and received a public reprimand from federal regulators. This, after a decade focused on process control, information technology and risk systems, makes the error substantially more costly than just the $900 million mistake. Regulators believe the company’s risk management improvements have fallen short of expectations. To rectify the situation, a process and technology spending surge could negatively affect 2021-2022 profits by 10% to 20%. Trust and confidence are important in large financial institutions, and this incident combined with the CEO’s sudden retirement shook ours.”

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Our calculations show that Citigroup Inc. (NYSE: C) ranks 26th in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Citigroup Inc. was in 95 hedge fund portfolios, compared to 91 funds in the third quarter. Citigroup delivered a 23.62% return in the past 3 months.