Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. That’s why we pay special attention to hedge fund activity in these stocks.
Hedge fund interest in City National Corp (NYSE:CYN) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare CYN to other stocks, including Starwood Property Trust, Inc. (NYSE:STWD), Southwestern Energy Company (NYSE:SWN), and Pinnacle Foods Inc (NYSE:PF) to get a better sense of its popularity.
Follow City National Corp (NYSE:CYN)
Follow City National Corp (NYSE:CYN)
In today’s marketplace there are dozens of signals market participants can use to evaluate publicly traded companies. A pair of the most under-the-radar signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best money managers can trounce the broader indices by a solid margin (see the details here).
With all of this in mind, we’re going to take a peek at the fresh action surrounding City National Corp (NYSE:CYN).
What have hedge funds been doing with City National Corp (NYSE:CYN)?
Heading into Q4, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Robert Emil Zoellner’s Alpine Associates has the most valuable position in City National Corp (NYSE:CYN), worth close to $113.6 million, accounting for 4.4% of its total 13F portfolio. Sitting at the No. 2 spot is Jim Simons of Renaissance Technologies, with a $72.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish encompass Alec Litowitz and Ross Laser’s Magnetar Capital, John Bader’s Halcyon Asset Management and Paul Tudor Jones’s Tudor Investment Corp.
Due to the fact that City National Corp (NYSE:CYN) has faced falling interest from the aggregate hedge fund industry, we can see that there is a sect of hedge funds that slashed their positions entirely last quarter. Interestingly, Millennium Management Subsidiary’s Green Arrow Capital Management sold off the largest investment of all the hedgies monitored by Insider Monkey, comprising an estimated $13.6 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was right behind this move, as the fund sold off about $4.6 million worth of CYN shares. These moves are interesting, 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 City National Corp (NYSE:CYN) but similarly valued. These stocks are Starwood Property Trust, Inc. (NYSE:STWD), Southwestern Energy Company (NYSE:SWN), Pinnacle Foods Inc (NYSE:PF), and Chesapeake Energy Corporation (NYSE:CHK). This group of stocks’ market values match CYN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STWD | 26 | 509315 | 1 |
| SWN | 38 | 569326 | 5 |
| PF | 37 | 1114405 | 5 |
| CHK | 34 | 1211147 | 1 |
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $851 million. That figure was just $406 million in CYN’s case. Southwestern Energy Company (NYSE:SWN) is the most popular stock in this table. On the other hand Starwood Property Trust, Inc. (NYSE:STWD) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks City National Corp (NYSE:CYN) is even less popular than STWD. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
