In this piece, we will take a look at the ten banking and finance stocks to buy today according to Rajiv Jain’s GQG Partners.
GQG Partners is an investment firm that is headquartered in the American state of Florida. It is headed by Mr. Rajiv Jain, who is the firm’s chairman and chief investment officer. Mr. Jain created GQG Partners in 2016, making it a relatively young investment firm in a financial world with players that have been operating for decades.
The investment firm’s approach involves conducting detailed research for its targeted companies, in order to differentiate its portfolios from their relevant industry benchmarks. Some of the metrics that GQG Partners considers for research include a company’s revenue and the chances that it has to disrupt the industry that it is operating in. It focuses on long only investments, which involve buying a company’s shares and holding on to them with the expectation that the share price will appreciate in the future and increase the hedge fund’s investment.
In this piece, we will take a look at Mr. Jain and his firm’s investments in the banking and financing sector. The top three holdings in this category are UnitedHealth Group Incorporated (NYSE:UNH), ICICI Bank Limited (NYSE:IBN), and JPMorgan Chase & Co. (NYSE:JPM). Additionally, GQG Partners has also invested in renowned companies such as Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), Walmart Inc. (NYSE:WMT).
Our Methodology
In order to pick GQG Partners’ top stocks in finance and banking, we sifted through the firm’s 13-F filings for the fourth quarter of last year. After identifying the stocks we analyzed them through their quarterly earnings, investor letters, analyst coverage, large shareholders, and hedge fund sentiment gathered through Insider Monkey’s survey of 924 hedge funds for Q4 2021.
10 Banking and Finance Stocks to Buy Today According To Rajiv Jain’s GQG Partners
10. Itaú Unibanco Holding S.A. (NYSE:ITUB)
GQG Partners’ Stake Value: $18 million
Percentage of GQG Partners’ 13F Portfolio: 0.04%
Number of Hedge Fund Holders: 19
Itaú Unibanco Holding S.A. (NYSE:ITUB) is a Brazilian bank that provides financial services in the South American country and globally. Some of these services include loans, credit cards, investment banking, and insurance.
GQG Partners had an $18 million stake in Itaú Unibanco Holding S.A. by the end of the fourth quarter of last year. This came through owning 4.8 million shares and it represented 0.04% of the firm’s portfolio. A Q4 2021 Insider Monkey survey of 924 hedge funds revealed that 19 had also owned a stake in the company.
Itaú Unibanco Holding S.A. earned R$33.44 billion in revenue and R$0.64 in GAAP EPS during its fourth fiscal quarter. Barclays set a $4.5 price target for the company in January 2022, highlighting that there is a need to balance its large scale with growth opportunities.
William B. Gray’s Orbis Investment Management is Itaú Unibanco Holding S.A.’s largest investor. It owns 45 million shares that are worth $170 million.
Alongside Microsoft Corporation, Alphabet Inc., and Walmart Inc., Itaú Unibanco Holding S.A. is one of Mr. Jain’s favorite investments.
9. The Progressive Corporation (NYSE:PGR)
GQG Partners’ Stake Value: $42 million
Percentage of GQG Partners’ 13F Portfolio: 0.1%
Number of Hedge Fund Holders: 52
The Progressive Corporation (NYSE:PGR) is an American insurance company headquartered in the state of Ohio. It offers personal insurance and also covers automobiles, property insurance for businesses, and property insurance for residential customers as well.
As its fiscal Q4 quarter came to an end, The Progressive Corporation earned $11.6 billion in net premiums and $1.63 in GAAP EPS, in a strong set of results that beat Wall Street analyst estimates for both. Barclays raised its share price target to $88 from $85 in March 2022, outlining that the company has its work cut out for it to return to double digit growth.
Mr. Jain’s investment firm owned 418,107 The Progressive Corporation shares by the end of the fourth quarter of last year. These were worth $42 million and represented 0.1% of its investment portfolio. An Insider Monkey poll targeting 924 hedge funds for the same time period highlighted that 52 also had a stake in the company.
The Progressive Corporation’s largest investor is William B. Gray’s Orbis Investment Management which owns 5.2 million shares that are worth $537 million.
Giverny Capital mentioned the company in its fourth quarter 2021 investor letter. Here is what the firm said:
“Progressive Corp. had a rough year that caused it to drop to our sixth-largest position from number three a year ago. Progressive is the country’s most efficient auto insurer, typically earning 7%-9% profit margins underwriting auto policies. The industry overall earns about 1% from underwriting. Progressive has a number of structural advantages that contribute to its superior profitability, including low customer acquisition costs (despite all the TV ads), superior data analytics that help it set accurate rates, efficient claims processes, and more.
The entire industry enjoyed a profit windfall in 2020 as Americans stayed home during the pandemic, driving fewer miles and getting in fewer accidents. In 2021, not only did they drive more, but they also drove worse. Accident frequency didn’t change much but severity did as there were more high-speed collisions. No underwriting model foresaw that strange turn of events. Worse, as supply chain challenges limited the production of new cars, the value of used cars soared. That Toyota that got insured based on an estimate of its value of $25,000? When the car got totaled, the cost to replace it might’ve been $35,000.
In the third quarter, Progressive lost money underwriting insurance for the first time in 20 years. The stock dipped based on fears that Progressive’s competitive position was slipping. But as the rest of the industry subsequently reported even worse results, it became clear that Progressive’s advantages had not eroded; rather, the entire industry had been stunned by the uptick in severe accidents and inflation in used car prices.
As I write this, it’s clear the industry will push through rate increases in 2022. When rates rise, consumers tend to shop more. Historically, when they shop more, Progressive grows faster because of
its ability to match the best rates to the right risks. We remain convinced Progressive will be a much larger company in five years than it is today.”
8. Blackstone Inc. (NYSE:BX)
GQG Partners’ Stake Value: $429 million
Percentage of GQG Partners’ 13F Portfolio: 1.06%
Number of Hedge Fund Holders: 63
Blackstone Inc. (NYSE:BX) is an asset management firm that targets several kinds of assets. These include real estate, credit, public debt, equities, hedge fund solutions, and more. It is headquartered in New York, New York, United States.
As Q4 2021 came to an end, GQG Partners had a $429 million stake in Blackstone Inc. via 3.3 million shares. It constituted 1.06% of the investment firm’s portfolio. For the same time period, 63 out of 924 hedge funds also owned the firm’s shares shows Insider Monkey’s research.
Blackstone Inc. raked in $4 billion in revenue and $1.71 in non-GAAP EPS for its fiscal fourth quarter, beating analyst estimates for both. The firm’s real estate division completed a $2.85 billion acquisition of a 49% stake in the One Manhattan West, a skyscraper in New York City, in March 2022.
John Allison’s Unio Capital is Blackstone Inc.’s largest investor through a $613 million stake that comes via 117,333 shares.
ClearBridge Investments mentioned the firm in its third quarter 2021 investor letter and outlined that:
“During the quarter we continued to trim Blackstone as the stock made new highs. We remain enthusiastic about the company’s prospects and continue to be large shareholders, but the risk-reward at current levels is balanced and we sought to manage the overall position size within the portfolio.”
7. Morgan Stanley (NYSE:MS)
GQG Partners’ Stake Value: $439 million
Percentage of GQG Partners’ 13F Portfolio: 1.09%
Number of Hedge Fund Holders: 67
Morgan Stanley (NYSE:MS) is an investment bank that is headquartered in New York, New York, and is one of the oldest firms of its kind after being set up in 1924 during the Gilded Era in American history. The bank has a host of services in its portfolio, which include debt underwriting, conducting initial public offerings (IPOs), financial advisory services, and wealth management.
As its fiscal Q4 came to an end, Morgan Stanley brought in $14.5 billion in revenue and $2.08 in non-GAAP EPS, managing to beat analyst estimates only for EPS. Odeon Capital kept the company’s share price target fixed at $108.85 in January 2022, based on the American regulatory environment.
GQG Partners’ 4Q 2021 stake in Morgan Stanley equaled $439 million and came through 4.4 million shares. Insider Monkey’s Q4 2021 survey of 924 hedge funds showed that 67 had held a stake in the bank.
Boykin Curry’s Eagle Capital Management is Morgan Stanley’s largest investor. It owns 14.5 million shares which are worth $1.4 billion.
Artisan Partners mentioned the firm in its third quarter 2021 investor letter and outlined that:
“Morgan Stanley, a leading global financial services company, came into the portfolio in late 2020 as a result of its purchase of E*TRADE. The acquisition is a great fit for Morgan Stanley’s wealth management platform and provides a considerable amount of non-interest-bearing deposit funding. James Gorman, chairman and CEO, has steadily derisked the business by adding less volatile fee streams to complement its leading positions in cyclical businesses such as advisory, equities and FICC (fixed income, currencies and commodities). We believe the company will prove its resiliency and value over the long term.”
6. HDFC Bank Limited (NYSE:HDB)
GQG Partners’ Stake Value: $480 million
Percentage of GQG Partners’ 13F Portfolio: 1.19%
Number of Hedge Fund Holders: 38
HDFC Bank Limited (NYSE:HDB) is an Indian bank that is headquartered in the city of Mumbai. It offers salary, current, savings, and other kinds of accounts, alongside providing safety deposit lockers, offshore accounts, and loans for different applications.
GQG Partners owned 7.3 million HDFC Bank Limited shares during the fourth quarter of 2021, in a $480 million stake which represented 1.19% of its investment portfolio. During the same time period, 38 of the 924 hedge funds part of Insider Monkey’s research had also invested in the bank.
HDFC Bank Limited posted ₹26,627 crores in revenue and GAAP EPS of ₹19 for its fiscal third quarter. This marked for 12% revenue and 21% net profit growth over the previous year’s results.
HDFC Bank Limited’s largest investor after GQG Partners is Ken Fisher’s Fisher Asset Management which owns 5 million shares worth $327 million.
Harding Loevner mentioned the firm in its Q4 2021 investor letter. Here is what the firm said:
“In the full year, we suffered negative stock selection in seven of the eleven sectors, including fourth-quarter culprits IT and Health Care, but also within Financials, where a couple of high-quality but economically sensitive EM banks—another way we gear our portfolio to secular growth trends—faltered in the face of their countries’ sluggish climb from their pandemic-induced troughs. HDFC Bank, meanwhile, fell victim to India’s own version of a strong cyclical rally, its share price outshined by lower-quality institutions. Partly offsetting Financials, the Industrials sector was the top contributor for the quarter and the year.”
HDFC Bank Limited joins Alphabet Inc., Microsoft Corporation, and Walmart Inc. in the list of GQG Partners’ top stock picks.
5. Humana Inc. (NYSE:HUM)
GQG Partners’ Stake Value: $528 million
Percentage of GQG Partners’ 13F Portfolio: 1.31%
Number of Hedge Fund Holders: 68
Humana Inc. (NYSE:HUM) is a financial company specializing in healthcare plans and operating in the United States. It offers several kinds of healthcare coverage, which includes supplemental plans, drug prescription plans, and insured benefits covering areas such as dental, vision, and others.
Mr. Jain’s investment firm owned 1.1 million Humana Inc. shares by the end of the fourth quarter of last year. These were worth $528 million and represented 1.31% of its investment portfolio. An Insider Monkey poll for the same time period revealed that 68 had owned a stake in the company.
Humana Inc. posted $21 billion in revenue and $1.24 in non-GAAP EPS for its fourth fiscal quarter, beating analyst estimates for EPS only. The company announced in February 2022 that it will add two new directors to its board as part of a refreshment process.
Humana Inc.’s largest investor is Natixis Global Asset Management’s Harris Associates which owns 4 million shares worth $2 billion.
4. Royal Bank of Canada (NYSE:RY)
GQG Partners’ Stake Value: $759 million
Percentage of GQG Partners’ 13F Portfolio: 1.88%
Number of Hedge Fund Holders: 16
Royal Bank of Canada (NYSE:RY), as the name suggests, is a Canadian bank based out of Toronto. It is also one of the oldest banks in the world, after being set up in 1864. The bank offers several services such as checking and savings accounts, lending, financing, brokerage accounts, and credit cards.
By the end of its fiscal Q1, Royal Bank of Canada had raked in C$13 billion in revenue and C$2.8 in GAAP EPS, in a strong set of results that saw it beat analyst estimates for both. Scotiabank raised its price target to C$162 from C$146 in February 2022 and set an Outperform rating on the shares.
GQG Partners’s stake in the Royal Bank of Canada was worth $759 million during last year’s final quarter. It came through the firm holding 7 million shares and represented 1.88% of its portfolio. Insider Monkey’s analysis of 924 hedge funds for Q4 2021 revealed that 16 had invested in the bank.
Royal Bank of Canada’s largest investor after GQG Partners is Jim Simons’s Renaissance Technologies. It owns 639,494 shares worth $67 million.
3. JPMorgan Chase & Co. (NYSE:JPM)
GQG Partners’ Stake Value: $806 million
Percentage of GQG Partners’ 13F Portfolio: 2%
Number of Hedge Fund Holders: 111
JPMorgan Chase & Co. is one of the world’s largest and oldest banks. It is headquartered in New York, New York United States, and was founded in 1799, soon after the American revolution. The bank offers several kinds of services in its portfolio. These include consumer, corporate, and commercial banking services alongside asset and wealth management.
By the end of last year’s fourth and final quarter, Mr. Jain’s investment firm had owned 5 million JPMorgan Chase & Co. shares which were worth $806 million and represented 2% of its investment portfolio. Insider Monkey’s survey of 924 hedge funds for the same time period revealed that 111 had held stakes in the bank.
In its latest fiscal fourth quarter, JPMorgan Chase & Co. earned $29 billion in revenue and $3.33 in GAAP EPS, missing analyst revenue estimates and beating them for EPS. Amidst the ongoing crisis in Ukraine, the bank reportedly received bond coupon payments from the Russian Federation according to a Reuters report.
Ken Fisher’s Fisher Asset Management is JPMorgan Chase & Co.’s largest investor through a $1 billion stake that comes via 7.4 million shares.
Miller Value Partners mentioned the bank in its fourth quarter 2021 investor letter. Here is what the fund said:
“I remember writing about the attractiveness of JP Morgan (JPM) right before it lost about a third of its value in the third quarter of 2011 (which didn’t please some of my colleagues!). I believed JPM was a high-quality bank whose prospects were undervalued due to the overhang on the space. It made money every year through the financial crisis.
In the decade-plus since then, JPM has beaten the market nicely (+417% versus SPX +345%) despite significant headwinds for banks (S&P Financial Sector +286%) and value stocks. Low market expectations are a key ingredient to attractive long-term returns!
An earthquake after-shock metaphor helps to explain the situation. Earthquakes relieve tension in physical systems, but aftershocks are common. These aftershocks aren’t as serious as the original event because stresses have been relieved. The financial crisis alleviated tensions in the financial system as weaker players either perished or were shored up with capital. Lessons learned impacted behavior (lower risk-taking behavior and higher propensity for monetary authorities to intervene supportively), which reduced future risk.
Those realities didn’t matter in the short term, but they sure did in the long term.”
2. ICICI Bank Limited (NYSE:IBN)
GQG Partners’ Stake Value: $904 million
Percentage of GQG Partners’ 13F Portfolio: 2.24%
Number of Hedge Fund Holders: 29
ICICI Bank Limited is an Indian bank that provides services both in its home country and all over the globe. These include offering several kinds of accounts, loans for a host of purposes, insurance products, and microfinance services.
ICICI Bank Limited raked in ₹61.93 billion in net profit for its fiscal third quarter, marking a hefty sequential increase. It also reported ₹122.3 billion in net interest income, marking for 23% annual growth.
GQG Partners held a massive $904 million stake in ICICI Bank Limited during Q4 2021, by owning 45 million shares. Out of the 924 hedge funds surveyed by Insider Monkey in Q4 2021, 29 had also owned the bank’s shares.
ICICI Bank Limited’s largest investor after GQG Partners is Robert Pohly’s Samlyn Capital. It has a $287 million stake via 14 million shares.
1. UnitedHealth Group Incorporated (NYSE:UNH)
GQG Partners’ Stake Value: $1.9 billion
Percentage of GQG Partners’ 13F Portfolio: 4.79%
Number of Hedge Fund Holders: 100
UnitedHealth Group Incorporated is a healthcare plan provider in the United States. Its plans cover several areas such as consumer oriented plans for different kinds of employers as well as those for individuals. Additionally, it also provides plans for preventive healthcare in older individuals and those with different diseases.
Mr. Jain’s investment firm had a whopping $1.9 billion stake in UnitedHealth Group Incorporated as Q4 2021 came to an end. This was through owning 3.8 million shares and it represented 4.79% of the investment firm’s portfolio. Insider Monkey’s research of 924 hedge fund portfolios for the same time period revealed that 100 had owned a stake in the firm.
For its fiscal Q4, UnitedHealth Group Incorporated reported $73.7 billion in revenue and $4.48 in non-GAAP EPS, beating analyst estimates for both. These results impressed Citi, which upgraded the health plan provider’s share rating to Buy from Neutral but kept its price target unchanged at $25.75 in February 2022.
UnitedHealth Group Incorporated’s largest investor after GQG Partners is Boykin Curry’s Eagle Capital Management which owns 3 million shares worth $1.5 billion.
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originally published on Insider Monkey.
