15 Small Cap Financial Stocks Hedge Funds Are Buying

3. KeyCorp (NYSE:KEY)

Market Capitalization: $15.868 Billion

Number of Hedge Fund Holders: 43

KeyCorp (NYSE:KEY) is a bank holding company that primarily operates through its KeyBank National Association. It provides a range of services through its Consumer and Commercial banking segments. The bank has a vast network of more than 1,000 branches and 40,000 ATMs across 15 states in the US.

On April 7, Baird analyst David George upgraded the stock from Neutral to Outperform with a price target of $18. The analyst noted that the recent softness has resulted in the best risk/reward situation for the company. He also mentioned that their firm has not seen such an attractive risk/reward situation since 2023.

During the fiscal first quarter of 2025, the management of KeyCorp (NYSE:KEY) acknowledged the impact of uncertainty and tariffs on the business, which has resulted in the pause of new capital projects. However, regardless of the uncertainty the company delivered 16% year-over-year growth in revenue to reach $1.8 billion. Moreover, the profitability also increased as net income grew 65% during the same time. It is one of the small-cap financial stocks hedge funds are buying.