Were hedge funds right about Citigroup Inc. (C)?


With the series of first quarter 13F deposits behind us, it’s time to take a look at which stocks some of the world’s top fund managers preferred to invest or sell before Q2 2021. One of those stocks was Citigroup Inc. (NYSE:VS).

Citigroup Inc. (NYSE:VS) appeared in 90 hedge fund portfolios at the end of March. The all-time high for this statistic is 121. C investors should be aware of a decrease in activity for the world’s largest hedge funds lately. There were 95 hedge funds in our database with C positions at the end of December. Our calculations nevertheless showed that C was ranked 29th among the 30 most popular stocks among hedge funds (click for Q1 ranking).

Today, there are many signals that stock market investors can use to value their investments in stocks. Some of the less used signals are hedge funds and insider trading. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the larger indices by a superb amount (see details here). Additionally, our monthly newsletter’s long stock picks portfolio has returned 206.8% since March 2017 (through May 2021) and has beaten the S&P 500 Index by over 115 percentage points. You can download a sample issue of this newsletter on our website .


Jeffrey Ubben of ValueAct Capital

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Do hedge funds think C is a good stock to buy now?

At the end of the first quarter, a total of 90 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% compared to the fourth quarter of 2020. Below, you can see the development sentiment of hedge funds towards C over the past 23 quarters. With the change in the hands of smart money capital, there are a few key hedge fund managers who were significantly increasing their holdings (or already building up significant positions).

Is CA a good stock to buy?

Is CA a good stock to buy?

Among these funds, ValueAct Capital held the most valuable stake in Citigroup Inc. (NYSE: C), which was worth $ 158.4 million at the end of the fourth quarter. In second place was Eagle Capital Management which raised $ 1,508.4 million in shares. Pzena Investment Management, First Pacific Advisors LLC, and Citadel Investment Group were also very fond of the stock, becoming one of the firm’s largest hedge fund holders. In terms of the portfolio weights assigned to each position, ValueAct Capital assigned the largest weight to Citigroup Inc. (NYSE: C), approximately 18.44% of its 13F portfolio. Oldfield Partners is also relatively very bullish on the stock, designating 11.74% of its stock portfolio 13F to C.

Given that Citigroup Inc. (NYSE: C) has seen bearish sentiment from smart money, logic dictates that there have been a few fund managers who have chosen to reduce their entire holdings in the first trimester. Curiously, Edgar Wachenheim Greenhaven Partners abandoned the largest investment of the 750 funds tracked by Insider Monkey, comprising around $ 286.7 million in stocks. Suzi Nutton’s (CEO) fund Lansdowne Partners also bid farewell to its shares, valued at around $ 73.5 million. These transactions are intriguing to say the least, as total hedge fund interest fell by 5 funds in the first quarter.

Let’s take a look at the activity of hedge funds in other stocks similar to Citigroup Inc. (NYSE: C). These shares are Royal Dutch Shell plc (NYSE:RDS), Honeywell International Inc. (NYSE:HON), QUALCOMM, Incorporated (NASDAQ:QCOM), The Boeing Company (NYSE:BA), NextEra Energy, Inc. (NYSE:BORN), United Parcel Service, Inc. (NYSE:UPS) and Union Pacific Corporation (NYSE:UNP). The market value of this group of shares is similar to the market value of C.

[table] Ticker, number of HF with positions, total value of HF positions (x1000), change of position HF RDS, 36.2190186.2 HON, 56.1731346.11 QCOM, 73.2765985, -12 BA, 59.1437584.4 NEE, 63.2725995.2 UPS, 44.1346598, -4 UNP, 75.4685045.7 Medium, 58.2411820,1.4 [/table]

See the table here if you have formatting problems.

As you can see, these stocks had an average of 58 hedge funds with bullish positions and the average amount invested in these stocks was $ 2,412 million. That figure was $ 6,938 million in the case of C. Union Pacific Corporation (NYSE:UNP) is the most popular action in this table. On the other hand, Royal Dutch Shell plc (NYSE:RDS) is the least popular with only 36 bullish hedge fund positions. Compared to these stocks, Citigroup Inc. (NYSE: C) is more popular among hedge funds. Our overall hedge fund sentiment score for C is 72.3. Stocks with a higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations have shown that top 5 most popular stocks among hedge funds, returned 95.8% in 2019 and 2020 and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.8% in 2021 through August 6 and have consistently beaten the market by 6.7 percentage points. Unfortunately, C was not as popular as these 5 stocks and the hedge funds that bet on C were disappointed as the stock returned -0.9% since the end of the first quarter (through 8/6) and underperformed the market. If you want to invest in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds, as most of these stocks have already outperformed the market since 2019.

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Disclosure: none. This article originally appeared on Monkey initiate.

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