In this article, we discuss the 10 best bank and finance stocks to buy according to Mario Gabelli. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Bank and Finance Stocks to Buy According to Mario Gabelli.
In an era of soaring market valuations and tech-dominated portfolios, the art of value investing has lost some of the attention it used to command back in the day when the word digital was only used to refer to giant machines called computers that served little to no purpose for the average investor. This was the era in which Mario Gabelli, the chief of GAMCO Investors, made his fortune at the market by betting on the media and telecom industries. Gabelli now manages $11.7 billion in assets with top holdings in the industrial and finance sectors.
Some of the top stocks in the investment portfolio of GAMCO Investors at the end of the second quarter of 2021 were JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and American Express Company (NYSE: AXP), among others discussed in detail below. Gabelli manages an incredibly diverse portfolio, the value of which has jumped $400 million in between March and June this year. Latest filings show that during the second quarter, Gabelli purchased 61 new stocks, made additional purchases in 245 equities, and sold out of 62 firms.
The investor, who was born and raised in New York, has a net worth of close to $2 billion. The top ten holdings comprise just 13.8% of the portfolio of his hedge fund. The top ten bank and finance stocks comprise 5.87% of the portfolio. The numbers provide great insight into the diverse portfolio of GAMCO Investors and the investing philosophy of Gabelli that has offered him handsome returns during a time when the wider finance sector is struggling to cope with technology-enabled disruptive forces.
Our Methodology
With this context in mind, here is our list of the 10 best bank and finance stocks to buy according to Mario Gabelli. These were ranked according to the investment portfolio of GAMCO Investors at the end of the second quarter of 2021.
The analyst ratings of each company are also discussed to provide readers with some more context about their investment decisions. The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Why should we pay attention to Gabelli’s stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Bank and Finance Stocks to Buy According to Mario Gabelli
10. Citigroup Inc. (NYSE: C)
Number of Hedge Fund Holders: 87
Citigroup Inc. (NYSE: C) is placed tenth on our list of 10 best bank and finance stocks to buy according to Mario Gabelli. The firm operates as a diversified financial services holding company and is headquartered in New York. Latest data shows that GAMCO Investors owned 300,905 shares in the firm at the end of the second quarter of 2021 worth $21.2 million, representing 0.18% of the portfolio.
On July 6, investment advisory Keefe Bruyette assumed coverage of Citigroup Inc. (NYSE: C) stock with an Outperform rating and a price target of $85, noting that the advisory was constructive on large cap banks in general.
At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $6.1 billion in Citigroup Inc. (NYSE: C), down from 90 the preceding quarter worth $6.9 billion.
Just like JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and American Express Company (NYSE: AXP), Citigroup Inc. (NYSE: C) is one of the best bank and finance stocks to buy according to Mario Gabelli.
In its Q1 2021 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Citigroup Inc. (NYSE: C) was one of them. Here is what the fund said:
“We fully exited position in Citigroup. Global financial services company Citigroup made a $900 million clerical error and received a public reprimand from federal regulators. This, after a decade focused on process control, information technology and risk systems, makes the error substantially more costly than just the $900 million mistake. Regulators believe the company’s risk management improvements have fallen short of expectations. To rectify the situation, a process and technology spending surge could negatively affect 2021-2022 profits by 10% to 20%. Trust and confidence are important in large financial institutions, and this incident combined with the CEO’s sudden retirement shook ours.”
9. PayPal Holdings, Inc. (NASDAQ: PYPL)
Number of Hedge Fund Holders: 143
PayPal Holdings, Inc. (NASDAQ: PYPL) is ranked ninth on our list of 10 best bank and finance stocks to buy according to Mario Gabelli. The company markets payments technology services and is headquartered in California. Securities filings reveal that GAMCO Investors owned 114,063 shares in the company at the end of June 2021 worth $33.2 million, representing 0.28% of the portfolio.
On July 29, investment advisory KeyBanc maintained an Overweight rating on PayPal Holdings, Inc. (NASDAQ: PYPL) stock with a price target of $335, underlining that the firm reported a noisy quarter and any pullback in price of the shares was a buying opportunity.
At the end of the second quarter of 2021, 143 hedge funds in the database of Insider Monkey held stakes worth $16 billion in PayPal Holdings, Inc. (NASDAQ: PYPL), the same as in the preceding quarter worth $14 billion.
Along with JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and American Express Company (NYSE: AXP), PayPal Holdings, Inc. (NASDAQ: PYPL) is one of the best bank and finance stocks to buy according to Mario Gabelli.
In its Q4 2020 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and PayPal Holdings, Inc. (NASDAQ: PYPL) was one of them. Here is what the fund said:
“For the full year 2020, one of the top performers was PayPal, which we purchased in 2019, the company continues to take market share in digital payments and has seen an acceleration in user adoption and engagement, especially within their “silver tech” or older user demographic. We expect many more years of ongoing double-digit growth from their various business segments and new initiatives.”
8. Morgan Stanley (NYSE: MS)
Number of Hedge Fund Holders: 69
Morgan Stanley (NYSE: MS) is a New York-based financial holding company. It is placed eighth on our list of 10 best bank and finance stocks to buy according to Mario Gabelli. Regulatory filings show that GAMCO Investors owned 366,483 shares in the company at the end of the second quarter of 2021 worth $33.6 million, representing 0.28% of the portfolio.
On July 19, investment advisory Citi maintained a Neutral rating on Morgan Stanley (NYSE: MS) stock and raised the price target to $97 from $88, highlighting the strong second quarter earnings results of the financial holding company.
At the end of the second quarter of 2021, 69 hedge funds in the database of Insider Monkey held stakes worth $5.3 billion in Morgan Stanley (NYSE: MS), down from 79 in the preceding quarter worth $5.2 billion.
In addition to JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and American Express Company (NYSE: AXP), Morgan Stanley (NYSE: MS) is one of the best bank and finance stocks to buy according to Mario Gabelli.
In its Q1 2021 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Morgan Stanley (NYSE: MS) was one of them. Here is what the fund said:
“Top three contributor Morgan Stanley, a leading global financial services company, came into the portfolio in Q4 as a result of its purchase of E*TRADE. E*TRADE is a great fit on Morgan Stanley’s wealth management platform and provides a considerable amount of non-interest-bearing deposit funding. James Gorman, chairman and CEO, has steadily de-risked Morgan Stanley’s business by adding less volatile fee streams and deemphasizing the risk-obtuse culture of prior management. We believe the market will come to appreciate this mix shift over time.”
7. The PNC Financial Services Group, Inc. (NYSE: PNC)
Number of Hedge Fund Holders: 38
The PNC Financial Services Group, Inc. (NYSE: PNC) is a Pennsylvania-based diversified financial services company. It is ranked seventh on our list of 10 best bank and finance stocks to buy according to Mario Gabelli. According to the latest filings, GAMCO Investors owned 250,999 shares in the firm at the end of June 2021 worth $47.8 million, representing 0.4% of the portfolio.
On July 15, investment advisory RBC Capital maintained an Outperform rating on The PNC Financial Services Group, Inc. (NYSE: PNC) stock and raised the price target to $200 from $190, noting the firm would continue ahead with a cost savings plan to boost earnings.
At the end of the second quarter of 2021, 38 hedge funds in the database of Insider Monkey held stakes worth $727 million in The PNC Financial Services Group, Inc. (NYSE: PNC), down from 39 in the previous quarter worth $418 million.
JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and American Express Company (NYSE: AXP) are some of the best bank and finance stocks to buy according to Mario Gabelli, along with The PNC Financial Services Group, Inc. (NYSE: PNC).
6. Bank of America Corporation (NYSE: BAC)
Number of Hedge Fund Holders: 87
Bank of America Corporation (NYSE: BAC) is placed sixth on our list of 10 best bank and finance stocks to buy according to Mario Gabelli. The company provides banking and financial services and is headquartered in North Carolina. GAMCO Investors owned more than 1.3 million shares in the firm at the end of the second quarter of 2021 worth over $57 million, representing 0.48% of the portfolio.
On July 6, investment advisory Keefe Bruyette assumed coverage of Bank of America Corporation (NYSE: BAC) stock with a Market Perform rating and a price target of $40, highlighting that the environment could become challenging for banks that had outsized growth.
At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $46 billion in Bank of America Corporation (NYSE: BAC), down from 97 in the previous quarter worth $45 billion.
JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and American Express Company (NYSE: AXP) are some of the best bank and finance stocks to buy according to Mario Gabelli, just like Bank of America Corporation (NYSE: BAC).
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Bank of America Corporation (NYSE: BAC) was one of them. Here is what the fund said:
“Higher long-term interest rates supported financials such as Bank of America, which has shown both defensive and offensive characteristics in the past year. We believe it continues to be the least risky large bank from a credit standpoint, with conservative underwriting and controlled risk taking, a leading consumer deposit franchise, scale and technology. It is also a leader in its commitments to sustainability, or as it terms it, responsible growth. Disclosure and reporting at all levels form a large part of this commitment, including gender diversity and equality, environmental commitments and support of communities in which it operates. In the first quarter Bank of America announced it is setting a goal of net-zero greenhouse gas (GHG) emissions in its supply chain and operations, and notably also in its financing activities, before 2050.”
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Disclosure. None. 10 Best Bank and Finance Stocks to Buy According to Mario Gabelli is originally published on Insider Monkey.
