Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Citrix Systems, Inc. (NASDAQ:CTXS) to find out whether there were any major changes in hedge funds’ views.
Is CTXS a good stock to buy? Hedge funds were in a pessimistic mood. The number of long hedge fund positions shrunk by 5 recently. Citrix Systems, Inc. (NASDAQ:CTXS) was in 31 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 45. Our calculations also showed that CTXS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are viewed as unimportant, outdated financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, We hone in on the top tier of this club, around 850 funds. These investment experts administer the majority of all hedge funds’ total capital, and by observing their inimitable picks, Insider Monkey has spotted several investment strategies that have historically defeated the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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Do Hedge Funds Think CTXS Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the second quarter of 2020. By comparison, 31 hedge funds held shares or bullish call options in CTXS a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Among these funds, SRS Investment Management held the most valuable stake in Citrix Systems, Inc. (NASDAQ:CTXS), which was worth $195.5 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $129.5 million worth of shares. GLG Partners, Arrowstreet Capital, and Fir Tree were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position SRS Investment Management allocated the biggest weight to Citrix Systems, Inc. (NASDAQ:CTXS), around 3.61% of its 13F portfolio. Fir Tree is also relatively very bullish on the stock, designating 1.75 percent of its 13F equity portfolio to CTXS.
Judging by the fact that Citrix Systems, Inc. (NASDAQ:CTXS) has experienced declining sentiment from the smart money, it’s safe to say that there is a sect of hedgies that slashed their positions entirely by the end of the third quarter. It’s worth mentioning that Anand Parekh’s Alyeska Investment Group dumped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, totaling close to $72 million in stock, and Josh Resnick’s Jericho Capital Asset Management was right behind this move, as the fund dumped about $61.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 5 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Citrix Systems, Inc. (NASDAQ:CTXS) but similarly valued. These stocks are Fox Corporation (NASDAQ:FOX), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), Check Point Software Technologies Ltd. (NASDAQ:CHKP), NatWest Group plc (NYSE:NWG), Grifols SA (NASDAQ:GRFS), ZoomInfo Technologies Inc. (NASDAQ:ZI), and Domino’s Pizza, Inc. (NYSE:DPZ). This group of stocks’ market valuations resemble CTXS’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $660 million. That figure was $644 million in CTXS’s case. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) is the most popular stock in this table. On the other hand NatWest Group plc (NYSE:NWG) is the least popular one with only 2 bullish hedge fund positions. Citrix Systems, Inc. (NASDAQ:CTXS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CTXS is 64.6. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and beat the market again by 16.4 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 -3.4% since the end of September (through 12/18) 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 so far this year.
Disclosure: None. This article was originally published at Insider Monkey.