In this article, we discuss the 10 financial services stocks to buy according to Nathan Przybylo’s L2 Asset Management.
Nathan Przybylo, the founder of Boston-based L2 Asset Management, manages more than $177 million in assets under management at his hedge fund. Przybylo obtained a Bachelor’s of Science degree in Applied Mathematics from Northwestern University in 2005. He then went to work as a senior analyst at Beghou Consulting. In 2010 he completed his MBA from Cornell University. Przybylo founded L2 Asset Management in in 2014 and serves as a partner at the firm.
Some of the top stocks in L2 Asset Management’s portfolio at the end of the second quarter of 2021 were Apple Inc. (NASDAG:AAPL), Microsoft Corporation (NASDAQ: MSFT) and Alphabet Inc. (NASDAQ:GOOG).
Our Methodology
With this context in mind, here is our list of the 10 financial services stocks to buy according to Nathan Przybylo’s L2 Asset Management.
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10. Mastercard Incorporated (NYSE:MA)
L2 Asset Management Stake Value: $226,000
Percentage of L2 Asset Management’s 13F Portfolio: 0.2%
No. of Hedge Fund Holders: 156
Ranked tenth on our list of 10 financial services stocks to buy according to Nathan Przybylo’s L2 Asset Management is Mastercard Incorporated (NYSE:MA). It operates in the credit services industry and provides transaction processing and other payment-related products and services globally. The company has a market cap of $343 billion.
According to latest security fillings, L2 Asset Management owns 618 shares worth $226,000 in Mastercard Incorporated. This represents 0.2% of the hedge fund’s 13F portfolio. At the end of the second quarter of 2021, 156 hedge funds in the database of Insider Monkey held stakes worth $17.1 billion in Mastercard Incorporated, up from 151 in the previous quarter worth $17 billion.
On August 17, analyst Tien-tsin Huang at JP Morgan kept an Overweight rating on Mastercard Incorporated stock and raised his price target to $430 from $427.
Like Apple Inc. (NASDAG:AAPL), Microsoft Corporation and Alphabet Inc., Mastercard Incorporated is one of the top stocks to buy according to Nathan Przybylo’s L2 Asset Management.
Qualivian Investment Partners, in its Q2 2021 investor letter, mentioned Mastercard Incorporated. Here is what the investment management firm has to say about the company:
“Mastercard: Q2 revenue and EPS beat consensus estimates by 3.7% and 12% respectively. Operating margins also beat consensus by +240 bps. Gross domestic volume growth of +38.3% (+32.8% in constant currency) was buttressed by continued e-commerce strength and better in-store performance, while purchase volumes grew 41.8% (35.5% in constant currency). Cross border performance was strong, but durability remains uncertain given uncertainty arising from the Delta variant and its impact on travel and tourism. We believe Mastercard has a robust runway for growth given further travel recovery, new/existing partnerships, traction in digital payments, and ongoing economic recovery.”
9. Visa Inc. (NYSE:V)
L2 Asset Management Stake Value: $280000
Percentage of L2 Asset Management’s 13F Portfolio: 0.25%
No. of Hedge Fund Holders: 162
Visa Inc. (NYSE:V) operates as a global payments technology company. It is based in San Francisco, California. The company is ranked ninth on our list of 10 financial services stocks to buy according to Nathan Przybylo’s L2 Asset Management. The company provides digital payment facilities among consumers, merchants, financial institutions, businesses, strategic partners and government entities.
At the end of the second quarter of 2021, 162 hedge funds in the database of Insider Monkey held stakes worth $27.6 billion in Visa Inc., down from 164 in the preceding quarter worth $26.5 billion. According to the latest 13F filings, in the second quarter of 2021, L2 Asset Management owned 1,196 shares in Visa Inc.. L2 Asset Management increased its stake in the company by 11% as compared to the previous quarter. Visa Inc. represents 0.25% of the total investment portfolio of the hedge fund at the end of second quarter of 2021.
8. SEI Investments Company (NASDAQ:SEIC)
L2 Asset Management Stake Value: $311000
Percentage of L2 Asset Management’s 13F Portfolio: 0.28%
No. of Hedge Fund Holders: 24
SEI Investments Company (NASDAQ:SEIC) is a global investment processing, investment management and investment operations solutions provider with its headquarters based in Oaks, Pennsylvania. It is eighth on our list of 10 financial services stocks to buy according to Nathan Przybylo’s L2 Asset Management.
At the end of the second quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $294.9 million in SEI Investments Company, down from 27 in the preceding quarter worth $304.6 million. Our data shows that Royce & Associates is one of the leading shareholders in SEI Investments Company with over 1 million shares worth $81 million.
In its Q2 2021 investor letter, Draco Global mentioned SEI Investments Company. Here is what Draco Global has to say about the company:
“SEIC (EUR 7,573m) is a financial company that offers asset management, back and midlle office services mainly to banks, insurers, fund managers, investment advisers, and family offices. Its competitive advantage comes from its software and its platform through a SaSS business via subscriptions that provide recurring income.
SEIC managed more than $ 786m and collected $ 370 at the end of 2020 (before LSV). Since it charges a fee on the assets managed and administered, part of the sales presents a high recurring revenue.
In essence, SEIC helps its clients with accounting, reporting, regulatory and CRM tasks all through its proprietary platform. Once the customer integrates into the SEIC interface, there is a high changeover cost that provides high customer retention.
We believe that the outsourcing of fund management presents a good business opportunity for SEIC. A more demanding regulatory environment and the needs of Capex in technology and people make outsourcing a structural trend of long-term growth in the sector. The expansionary policies of central banks also benefit the appreciation of financial assets, attracting higher assets under Management that increase future commissions.
We calculate a 2023e target value of $ 80 per share, upside potential at the current price of + 25%, and an IRR of 7%. Our average purchase price is $ 60 per share.”
7. The Goldman Sachs Group, Inc. (NYSE:GS)
L2 Asset Management Stake Value: $630 million
Percentage of L2 Asset Management’s 13F Portfolio: 0.58%
No. of Hedge Fund Holders: 61
The Goldman Sachs Group, Inc. (NYSE:GS) is a New York-based financial services firm. Investment management, securities, asset management, prime brokerage and securities underwriting are the main services it provides. It ranks seventh on the list of 10 financial services stocks to buy according to Nathan Przybylo’s L2 Asset Management. The hedge fund increased its stake in the company by 74% in the second quarter of 2021.
On October 1, Citi kept a Buy rating on The Goldman Sachs Group, Inc. and raised its price target to $440 from $410. In the second fiscal quarter, The Goldman Sachs Group, Inc. reported an EPS of $15.02, surpassing estimates by $5.07.
Out of the hedge fund being tracked by Insider Monkey, Eagle Capital Management is one of the leading shareholders in The Goldman Sachs Group, Inc. with 3.8 million shares worth $1.4 billion. At the end of the second quarter of 2021, 61 hedge funds in the database of Insider Monkey held stakes worth $5.2 billion in The Goldman Sachs Group, Inc., down from 77 the preceding quarter worth $5 billion.
In its Q2 2021 investor Letter, Ariel Investments mentioned that The Goldman Sachs Group, Inc. has posted a series of excellent quarterly results. Here is what Ariel Investments has to say about the company:
“Goldman Sachs Group Inc. (GS) returned +16.45%. Goldman has posted a series of excellent quarterly results. Merger and equity offering activity has been robust with trading profits bolstered by strong capital market volumes. Goldman’s asset management business has also performed well. Regulators recently moved to allow most large investment banks to return capital to shareholders through dividends and share repurchases. Fundamentally, we think Goldman Sachs is attractively priced at approximately 11 times earnings and a very reasonable multiple of book value.”
6. Discover Financial Services (NYSE:DFS)
L2 Asset Management Stake Value: $1.1 million
Percentage of L2 Asset Management’s 13F Portfolio: 1.04%
No. of Hedge Fund Holders: 37
Ranked sixth on the list of 10 financial services stocks to buy according to Nathan Przybylo’s L2 Asset Management is Discover Financial Services (NYSE:DFS). It has a market cap of $38.5 billion. It is a financial services firm that owns and runs Discover Bank. This bank provides checking and savings accounts, home equity loans, personal loans, student loans and credit cards.
Przybylo’s L2 Asset Management owns 9,527 shares worth $1.1 million in Discover Financial Services. This makes up 1.04% of the hedge fund’s holdings according to latest security filings.
In October, investment advisory Piper Sandler kept a Neutral rating on Discover Financial Services stock and increased its price target to $117 from $114. In the second fiscal quarter, Discover Financial Services reported an EPS of $5.55, beating estimates by $1.66. The firm’s revenue came in at $3.58 billion in the second fiscal quarter, an increase of 34.6% year over year, and beat revenue estimate by $570 million.
At the end of the second quarter of 2021, 37 hedge funds in the database of Insider Monkey held stakes worth $450.9 million in Discover Financial Services, down from 45 the preceding quarter worth $654.3 million.
5. Morgan Stanley (NYSE:MS)
L2 Asset Management Stake Value: $1.4 million
Percentage of L2 Asset Management’s 13F Portfolio: 1.33%
No. of Hedge Fund Holders: 69
Morgan Stanley (NYSE:MS) is an investment bank and financial services corporation located in Midtown Manhattan, New York City. It ranks fifth on the list of 10 financial services stocks to buy according to Nathan Przybyla’s L2 Asset Management.
Based on latest security filings, L2 Asset Management holds 15,723 shares worth $1.4 million in Morgan Stanley. This represents 1.33% of the hedge fund’s 13F portfolio. 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, down from 79 the preceding quarter worth $5 billion. With 15.5 million shares worth $1.4 billion, Eagle Capital Management is the firm’s leading shareholder.
In its Q2 2021 investor letter, ClearBridge Investments mentioned that Morgan Stanley has been a leader in helping direct capital to address global sustainability challenges. Here is what ClearBridge Investments has to say about the company:
“The Strategy also benefited from strong showings from financials holdings such as recent addition Morgan Stanley, a leading bank holding company offering a variety of financial services worldwide, and one of the largest broker-dealers, investment banks and wealth managers in the U.S. Morgan Stanley has been a leader in helping direct capital to address global sustainability challenges. Its sustainability efforts include capital markets actions such as issuing green bonds and it was early in its support for sustainability in investing and its concern for the environment. Morgan Stanley reported a great quarter with record revenues and strength across the businesses as it works to integrate and find synergies with recent acquisition E*TRADE. Following stress tests for banks, Morgan Stanley increased its dividend and share repurchase plan more than expected.”
4. Bank of America Corporation (NYSE:BAC)
L2 Asset Management Stake Value: $1.6 million
Percentage of L2 Asset Management’s 13F Portfolio: 1.49%
No. of Hedge Fund Holders: 87
Bank of America Corporation (NYSE:BAC) represents 1.49% of Przybylo’s L2 Asset Management portfolio. The hedge fund decreased its activity in the firm by 36% in the second quarter of 2021. On October 11, investment advisory Jefferies kept a Hold rating on Bank of America Corporation and increased its price target to $48 from $41.
In the second fiscal quarter, Bank of America Corporation reported an EPS of $1.03, surpassing analyst estimates by $0.26. The company’s revenue in the second fiscal quarter came in at $21.47 billion, missing revenue estimates by $300 million.
At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $46.5 billion in Bank of America Corporation, down from 97 the preceding quarter worth $45.3 billion.
ClearBridge Investments, in its Q1 2021 investor letter, mentioned that the firm believes Bank of America Corporation to be the least risky large bank from a credit standpoint: Here is what ClearBridge Investments has to say about the company:
“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.”
3. Ameriprise Financial, Inc. (NYSE:AMP)
L2 Asset Management Stake Value: $1.9 million
Percentage of L2 Asset Management’s 13F Portfolio: 1.73%
No. of Hedge Fund Holders: 37
Ameriprise Financial, Inc. (NYSE:AMP) ranks third on the list of 10 financial services stocks to buy according to Nathan Przybylo’s L2 Asset Management. The company has a market cap of $32 billion and is headquartered in Minneapolis, Minnesota. This holding company offers a range of financial services.
Przybylo’s L2 Asset Management owns 7,530 shares worth $1.9 million in Ameriprise Financial, Inc., which makes up 1.73% of the hedge fund’s 13F portfolio. At the end of the second quarter of 2021, 37 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Ameriprise Financial, Inc., same as the preceding quarter worth $969.8 million.
2. JPMorgan Chase & Co. (NYSE:JPM)
L2 Asset Management Stake Value: $2 million
Percentage of L2 Asset Management’s 13F Portfolio: 1.93%
No. of Hedge Fund Holders: 108
In the second quarter of 2021, JPMorgan Chase & Co. reported an EPS of $3.78, beating estimates by $0.60. The company’s revenue in the second fiscal quarter came in at $30.5 billion, a decrease of $7.9% year over year, and beat analyst estimates by $790 million.
At the end of the second quarter of 2021, 108 hedge funds in the database of Insider Monkey held stakes worth $4.9 billion in JPMorgan Chase & Co., down from 111 the preceding quarter worth $5.2 billion.
In Its Q3 2021 investor letter, Vltava Fund mentioned that it considers JPMorgan Chase & Co. to be the strongest, largest and most profitable bank in the world. Here is what Vltava Fund has to say about the company:
“While all the previous names could be categorised as founder, continuing, or key shareholders, these last two names fall into the category of hired professional managers. This is actually the most numerous category among the bosses of large companies, but even among them there exist a number of individuals with exceptional long-term track records. In our view, these include also Jamie Dimon and Herman Gref.
We consider JP Morgan to be the strongest, largest, and most profitable bank in the world. It has not always been so, and the fact that it is what it is today can be attributed especially to its CEO Jamie Dimon. Dimon has spent his entire career in banking. He came to JP Morgan in a roundabout way in 2004 after the bank bought Bank One, of which he was CEO at the time. Since early 2006, Dimon has been CEO of the entire JP Morgan.
The quality and strength of JP Morgan under his leadership became fully apparent for the first time in 2008. Not only did JP Morgan help to stabilise the market by taking over the failing Bear Stearns in the spring of that year, but it was the only major US bank that did not require government assistance throughout the Great Financial Crisis and that was highly profitable even in the difficult year of 2008. Today, JP Morgan is even bigger, even more profitable, and even stronger than ever before. Many investors view banks with disdain, but a good bank with good management can be a very good long-term investment. From the time of its merger with Bank One in 2004 through the end of 2020, JP Morgan’s stock has outperformed even the S&P 500 index. The bank has earned a total net profit of USD 330 billion during this period, of which USD 232 billion has been paid out to shareholders in dividends and in share buybacks. I can recommend two books about Jamie Dimon: The House of Dimon and Last Man Standing.”
1. Synchrony Financial (NYSE:SYF)
L2 Asset Management Stake Value: $2.5 million
Percentage of L2 Asset Management’s 13F Portfolio: 2.29%
No. of Hedge Fund Holders: 39
According to latest security filings, Przybylo’s L2 Asset Management owns 50,923 shares worth $2.5 million in Synchrony Financial (NYSE:SYF). This represents 2.29% of the hedge fund’s 13F portfolio. In the second quarter of 2021, Synchrony Financial reported an EPS of $2.12, beating estimates by $0.72. The company’s revenue of $3.4 billion beat the estimates by $800 million and presented a 2.6% year over year decline.
On September 10, investment advisory Credit Suisse kept an Outperform rating on Synchrony Financial stock and increased the price target to $63 from $59, appreciating the company’s long-term financial targets.
At the end of the second quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Synchrony Financial, down from 49 the preceding quarter worth $1.9 billion.
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originally published on Insider Monkey.
