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Lloyds Banking Group PLC (LYG) Doesn’t Excite Hedge Funds

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Lloyds Banking Group PLC (NYSE:LYG), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Lloyds Banking Group PLC (NYSE:LYG) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 8 hedge funds’ portfolios at the end of June. Our calculations also showed that LYG isn’t among the 30 most popular stocks among hedge funds (watch the video below). At the end of this article we will also compare LYG to other stocks including EOG Resources Inc (NYSE:EOG), Air Products & Chemicals, Inc. (NYSE:APD), and Simon Property Group, Inc (NYSE:SPG) to get a better sense of its popularity.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

According to most traders, hedge funds are viewed as underperforming, outdated investment tools of the past. While there are over 8000 funds with their doors open today, Our experts hone in on the moguls of this club, approximately 750 funds. It is estimated that this group of investors preside over the lion’s share of the hedge fund industry’s total asset base, and by observing their best stock picks, Insider Monkey has discovered various investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

Ken Griffin CITADEL INVESTMENT GROUP

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 review the key hedge fund action regarding Lloyds Banking Group PLC (NYSE:LYG).

How are hedge funds trading Lloyds Banking Group PLC (NYSE:LYG)?

At the end of the second quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LYG over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

LYG_oct2019

More specifically, Renaissance Technologies was the largest shareholder of Lloyds Banking Group PLC (NYSE:LYG), with a stake worth $46.7 million reported as of the end of March. Trailing Renaissance Technologies was LMR Partners, which amassed a stake valued at $3.2 million. Two Sigma Advisors, Arrowstreet Capital, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.

Since Lloyds Banking Group PLC (NYSE:LYG) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few funds who were dropping their full holdings by the end of the second quarter. Intriguingly, Simon Sadler’s Segantii Capital dropped the biggest stake of the 750 funds tracked by Insider Monkey, comprising an estimated $2.8 million in stock, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt. was right behind this move, as the fund sold off about $0.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Lloyds Banking Group PLC (NYSE:LYG) but similarly valued. These stocks are EOG Resources Inc (NYSE:EOG), Air Products & Chemicals, Inc. (NYSE:APD), Simon Property Group, Inc (NYSE:SPG), and Walgreens Boots Alliance Inc (NASDAQ:WBA). All of these stocks’ market caps match LYG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EOG 36 1212228 -3
APD 32 506090 -2
SPG 26 908545 -2
WBA 41 782849 8
Average 33.75 852428 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.75 hedge funds with bullish positions and the average amount invested in these stocks was $852 million. That figure was $53 million in LYG’s case. Walgreens Boots Alliance Inc (NASDAQ:WBA) is the most popular stock in this table. On the other hand Simon Property Group, Inc (NYSE:SPG) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Lloyds Banking Group PLC (NYSE:LYG) is even less popular than SPG. Hedge funds dodged a bullet by taking a bearish stance towards LYG. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately LYG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); LYG investors were disappointed as the stock returned -4.9% 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 so far in 2019.

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

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