The stock is starting to show fatigue at the $47 to $48 per share level, which could be the result of a lackluster earnings report last quarter. Net income, EPS and revenue are all down for FY2012 compared to one year earlier. Although the banking sector is getting a boost from the bullish outlook on housing, there are plenty of other banking stocks that look much more attractive than Citigroup, such as Wells Fargo, for example. Check out one hedge fund manager who has been buying Wells Fargo lately; hint: his name is Warren Buffett.
A new addition to Clough Capital is American International Group Inc (NYSE:AIG), number four of its top five equity picks. After its 11th hour bailout by the government in 2009 as a result of AIG’s disastrous decision to underwrite credit-default swaps on mortgage-backed securities, the insurer has returned to its core business. The leaner, meaner insurer’s stock price has climbed steadily off its 2011-low near $20 per share, last trading just below the $40 mark. Less than impressive financials, however—2012 revenue is down 45% from 2011—and competition from Hartford, American Financial and other insurance companies, has many analysts recommending a HOLD for AIG at the moment. Still, this stock was hedge funds’ new No. 1 in Q4, so it’s worth paying attention to the smart money’s sentiment.
Rounding out Clough’s top five is the tax and banking service provider H&R Block, Inc. (NYSE:HRB). Because of the delay in the 2013 tax-filing season from last year’s fiscal-cliff debacle, and subsequent action by the IRS to delay submission of certain returns until Jan 29th, revenue in H&R’s tax services sector was down almost 30%. The company deferred $15 million of revenue to its fiscal 4Q, which caused some pressure on the stock price at the start of the year. Shares have, however, surged 8.9% to a four-and-a-half year high of $28.27 of late, on the heels of remarks by CEO William Cobb that this year’s filings will grow by 1% to 2%. Broadly speaking, H&R is planning to take full advantage of taxpayers’ anticipated confusion over the change in tax laws and implementation of Obamacare this year. It’s easy to see why this hedgie is bullish.
Each of these investments represents obvious upside, but the one common thread that exists among the five is that they’re supported by the smart money at large. In fact, only H&R Block sits outside of the hedge fund industry’s consensus top ten, and AIG is smart money’s new No. 1 holding. Check out who the insurer displaced, here on Insider Monkey.
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