Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

The 5 Banking Stocks That Hedge Funds Are Depositing Their Money Into

Page 1 of 2

The financial services sector is up by nearly 11% year-to-date, according to Morningstar data. The banking industry has contributed somewhere between 3.5% to 4.1% of the gains to the sector’s performance, depending on whether they are operating globally or solely within the U.S. We thought it would be interesting to find out whether the hedge funds that we track have been successful in picking out the best performers in the banking industry. The following list of their top banking industry stock picks has the backing of the rigorous research that these investment firms undertake before investing in any stock and can thus serve as a guideline for everyday investors, who do not necessarily have the resources or the skill-set to pick out the best stocks.

city-408952_1280 (1)

Why do we pay attention to hedge fund sentiment? Most investors ignore hedge funds’ moves because as a group their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the market in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research have shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period. We have been tracking the performance of these stocks in real-time since the end of August 2012. After all, things change and we need to verify that back-test results aren’t just a statistical fluke. We weren’t proven wrong. These 15 stocks managed to return more than 118% over the last 36 months and outperformed the S&P 500 Index by 60.4 percentage points (see the details here).

5. Bank of New York Mellon Corp (NYSE:BK)
Investors with Long Positions (as of June 30): 62
Aggregate Value of Investors’ Holdings (as of June 30): $6.50 Billion

During the June quarter, Bank of New York Mellon Corp (NYSE:BK)’s popularity increased considerably, as only 51 firms had invested a total of $6.25 billion in the company at the end of March. Although the stock price rose by almost 4% during this period, it is down by about 3.8% year-to-date following the market volatility in the second half of last month. Nelson Peltz‘s Trian Partners is the largest stockholder of Bank of New York Mellon Corp (NYSE:BK) among those that we track, holding more than 30.22 million shares valued at $1.27 billion.

4. Wells Fargo & Co (NYSE:WFC)
Investors with Long Positions (as of June 30): 91
Aggregate Value of Investors’ Holdings (as of June 30): $34.13 Billion

Hedge funds showed a renewed enthusiasm for Wells Fargo & Co (NYSE:WFC), as ownership among funds rose from just 72 firms having invested $32.81 billion in the $261.75 billion financial and bank holding company at the end of the first trimester. Sandler O’Neil recently upgraded Wells Fargo & Co (NYSE:WFC) to ‘Buy’ from ‘Hold’, with a price target of $59 providing an almost 14% upside to the current price. Warren Buffett‘s Berkshire Hathaway is the largest stockholder of Wells Fargo & Co (NYSE:WFC), holding some 470.29 million shares valued at $26.45 billion.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!