5 Banking Stocks To Buy Now According To This Elite Hedge Fund

#3 Bank of New York Mellon Corp (NYSE:BK)

Shares held (as of September 30): 1.22 million
Total Value (as of September 30): $47.63 million
Percent of Portfolio (as of September 30): 12.11%

Bank of New York Mellon Corp (NYSE:BK) is up by 5.46% year-to-date, as the company has beaten analysts’ earnings expectations for three straight quarters. At a forward P/E of 13.62 and with a dividend yield of 1.61%, Bank of New York Mellon Corp is not the cheapest bank in the world, but it is one of the safest. The bank Alexander Hamilton founded has been around for more than 200 years, and will be around for many more if it sticks to its investment management business model. Hedge funds we monitor were bullish on Bank of New York Mellon Corp in the second quarter. A total of 62 funds reported stakes worth $6.49 billion (representing 13.80% of the stock’s float) at the end of June, up from 51 funds and $6.25 billion at the end of March. Nelson Peltz‘s Trian Partners owned 30.23 million shares at the end of the second quarter.

#2 Capital One Financial Corp. (NYSE:COF)

Shares held (as of September 30): 661,700
Total Value (as of September 30): $47.99 million
Percent of Portfolio (as of September 30): 12.20%

Shares of Capital One Financial Corp. (NYSE:COF) are roughly flat year-to-date. On October 22, the company reported third quarter earnings of $1.98 per share on revenues of $5.9 billion, beating estimates by $0.04 per share and $10 million, respectively. Domestic card loans increased by 4% year-over-year to $82.2 billion while period-end loans held for investment rose by 2% to $213.3 billion. With a payout ratio of just 18.1%, Capital One’s dividend yield of 1.97% is safe. Ric Dillon‘s Diamond Hill Capital owned 3.56 million shares of the stock at the end of June.

#1 Wells Fargo & Co (NYSE:WFC)

Shares held (as of September 30): 1.07 million
Total Value (as of September 30): $54.74 million
Percent of Portfolio (as of September 30): 13.92%

It’s not surprising that Wells Fargo & Co (NYSE:WFC) is Horseman Capital’s top holding, good for 13.92% of the fund’s portfolio. Wells Fargo is also Berkshire Hathaway’s top position as of June 30 (as you can see, Buffett also likes banks). Wells Fargo is an favorite of elite funds because it doesn’t take as many risks as other money center banks, and because it earns a nice return on capital, with a return-on-equity of 13.1% and return-on-assets of 1.3%. The bank is expanding this year, having recently acquired several parts of General Electric Company (NYSE:GE)’s GE Capital. With a forward P/E of 12.3 and boasting a dividend yield of 2.74%, shares are attractive.

Disclosure: None