Hedge Funds Like These Financial Stocks

#3 Citigroup Inc (NYSE:C)

– Number of Hedge Fund Holders (as of June 30): 97
– Total Value of Hedge Fund Holdings (as of June 30): $8.5 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 6.80%

With a price to book value of 0.66, Citigroup Inc (NYSE:C) is the cheapest stock on our list in terms of book value. Although it might not benefit from rising interest rates as much as its peers due to its more international nature, Citigroup’s profits should nevertheless grow. Analysts expect Citigroup to make $5.19 in profits per share next year, versus the $4.75 per share the bank made in the trailing twelve months. If Citigroup should hit that mark, the bank’s management will have more capital to do buybacks or raise the dividend. 97 elite funds owned shares of Citigroup Inc (NYSE:C) as of the most recent 13-F reporting period, down 4 funds from the previous quarter.

#2 JPMorgan Chase & Co. (NYSE:JPM)

– Number of Hedge Fund Holders (as of June 30): 99
– Total Value of Hedge Fund Holdings (as of June 30): $7.24 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 3.20%

Among some 750 tracked by our team, 99 funds had a bullish position in JPMorgan Chase & Co. (NYSE:JPM) heading into the third quarter, up by two funds from the previous quarter. Hedge funds like JPMorgan due to the company’s solid track record of strong execution and rock-solid balance sheet. For its second quarter, JPMorgan soundly beat analyst estimates with EPS of $1.55 on revenue of $25.21 billion. Analysts were expecting $0.12 per share and $1.05 billion less. Many investors also like JPMorgan’s generous capital return policy. It’s not too often that investors have the opportunity to buy a sector leader that pays a dividend yield of over 2.8% at current prices.

#1 Bank of America Corp (NYSE:BAC)

– Number of Hedge Fund Holders (as of June 30): 102
– Total Value of Hedge Fund Holdings (as of June 30): $5.28 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 3.90%

With 102 funds from our database reporting long positions in the stock at the end of June, Bank of America Corp (NYSE:BAC) is the smart money’s top financial stock pick. Although the stock has experienced many false-hope rallies before, this time could really be different. Given Bank of America’s largely domestic nature, its cheap valuation, and its considerable exposure to the interest rate changes, many investors feel the bank is the best higher-beta play to gain exposure to the upcoming interest rate hikes. As interest rates rise, so should Bank of America’s profits and capital returns to shareholders.

Disclosure: none