In this article we discuss the 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital.
Daniel Bartlett Johnson is the founder and portfolio manager at Gillson Capital, a hedge fund based in Chicago.
As of Q2 of 2021, Gillson Capital has stakes in several big companies like W. R. Berkley Corporation (NYSE: WRB), The Bank of New York Mellon Corporation (NYSE: BK), and Capital One Financial Corporation (NYSE: COF).
Based on the latest 13F holdings for the second quarter of 2021, Gillson Capital owns 388,524 shares in W. R. Berkley Corporation worth $28.918 million. Moreover, Gillson Capital has increased its stake in W. R. Berkley Corporation by 7% since the end of the previous quarter.
In The Bank of New York Mellon Corporation, Daniel Johnson’s fund owns 26,170 shares. The investment covers 2.43% of the fund’s portfolio. On September 30, The Bank of New York Mellon Corporation initiated a strategic investment in a data and analytics software firm named Quantexa Technology in an attempt to digitalize its services and processes.
Another notable stock in Daniel Johnson’s portfolio is Capital One Financial Corporation. The investor owns an $18.847 million stake in the company. On July 22, Capital One Financial Corporation reported earnings for the second quarter of 2021. It declared earnings per share of $7.71, beating the market predictions by $3.17. In addition, revenue for the second quarter was $7.37 billion, up 12.48% year over year, beating the estimates by over $249 million.
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Why should we follow Johnson’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 more than 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.
Keeping all these points in mind, let’s start our list of the 10 best stocks to buy according to Daniel Johnson’s Gillson Capital. We used Johnson’s 13F portfolio for the second quarter of the year 2021 for this analysis.
10 Best Financial Services and Bank Stocks to Buy According to Daniel Johnson’s Gillson Capital
10. Bank of America Corporation (NYSE:BAC)
Gillson Capital’s Stake Value: $11.605 million
Percentage of Gillson Capital’s 13F Portfolio: 1.08%
Number of Hedge Fund Holders: 87
The Bank of America Corporation (NYSE: BAC) is headquartered in the state of North Carolina. The primary services of this bank include wealth management, commercial banking, and investment banking. The company posted year-on-year revenue growth of 13.3% in 2021.
At the end of the second quarter, there were 87 hedge funds in Insider Monkey’s database that held stakes in Bank of America Corporation as compared to 97 hedge funds by the end of the first quarter. Martin Taylor’s Crake Asset Management owns 1.13 million shares of Bank of America Corporation and is, therefore, the biggest shareholder of the company. Gillson Capital currently owns 281,465 shares in the company, which amounts to a worth of $11.605 million.
ClearBridge Investments, in its first-quarter 2021 investor letter, mentioned Bank of America Corporation. 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.”
9. American Financial Group, Inc. (NYSE:AFG)
Gillson Capital’s Stake Value: $13.438 million
Percentage of Gillson Capital’s 13F Portfolio: 1.25%
Number of Hedge Fund Holders: 19
American Financial Group, Inc. (NYSE: AFG) is placed ninth on our list of 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital. According to the latest filings, Millennium Management owned 635,311 shares in the company at the end of the second quarter of 2021 worth $79.2 million, representing 0.04% of the portfolio. Gillson Capital’s stake in the company includes 107,748 shares and is valued at $13.438 million.
In September 2021, American Financial Group, Inc. announced a special dividend of $4 per share instead of its prior dividend of $2.00.
At the end of the second quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes in American Financial Group, Inc., down from 21 after the preceding quarter.
Just like W. R. Berkley Corporation, The Bank of New York Mellon Corporation, and Capital One Financial Corporation, American Financial Group, Inc. is one of the most significant stocks in Gillson Capital’s portfolio.
In its Q1 2021 investor letter, Headwaters Capital Management, an asset management firm, highlighted a few stocks and American Financial Group, Inc. was one of them. Here is what the fund said:
“American Financial Group is proof that I’m less concerned with whether a stock is a “value” or “growth” stock, but more concerned with the quality of the business and the durability of its earnings power. AFG was the top performer during the quarter as it successfully realized value for its life insurance segment through an announced sale of this business to Mass Mutual. Investors generally disliked AFG’s life insurance business due to its interest rate sensitivity and investment portfolio leverage. As a result, the market was ascribing less than a book value multiple for AFG’s life insurance business despite multiple publicly announced transactions of competitors that valued similar books of business at 1.2x book value (which is ultimately the multiple that Mass Mutual paid). Investor concerns with the life insurance segment presented an opportunity for us to purchase AFG at a discount to fair value with an opportunity to compound capital at a 10-15% annualized rate for many years to come. While I didn’t expect an outright sale of the life insurance business, I applaud management for monetizing this asset and realizing value for shareholders. AFG’s stock outperformed once the sale was announced as the value of this business was higher than the market appreciated.”
8. Voya Financial, Inc. (NYSE:VOYA)
Gillson Capital’s Stake Value: $13.470 million
Percentage of Gillson Capital’s 13F Portfolio: 1.26%
Number of Hedge Fund Holders: 44
Voya Financial, Inc. (NYSE: VOYA) is ranked eighth on our list of 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital. The firm operates from New York and provides services in retirement, investment, and insurance. According to the latest data, Gillson Capital owns 219,028 shares in the company that are worth more than $13.4 million.
Out of all the hedge funds that are being tracked by Insider Monkey, the New York-based investment firm Pzena Investment Management is the leading shareholder in Voya Financial, Inc. with more than 4.7 million shares worth over $290 million.
In addition to Discover Financial Services (NYSE: DFS), Bank of America Corporation, and Ameriprise Financial, Inc. (NYSE: AMP), Voya Financial, Inc. is one of the 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital.
Greenlight Capital, an investment management company, made significant comments about the stock of Voya Financial, Inc. in its Q4 2019 investor letter. Here is what the fund said:
“After six and a half years, we exited our investment in Voya Financial. The position, which had many similarities to BHF, generated a compounded return of 21.7% for the Partnerships. Management executed a successful business repositioning and bought back 53% of its shares outstanding. With the shares trading at a premium to book value and a double-digit P/E multiple, we exited to focus our capital on BHF.”
7. Discover Financial Services (NYSE:DFS)
Gillson Capital’s Stake Value: $17.295 million
Percentage of Gillson Capital’s 13F Portfolio: 1.61%
Number of Hedge Fund Holders: 37
An American financial services company, Discover Financial Services manages Discover Bank, which not only provides its services in saving accounts but also caters to home equity loans, personal loans, student loans, and credit cards. Incorporated in 1911, it is ranked seventh on the list of 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital. Discover Financial Services has a market capitalization of $38.026 billion.
6. Ameriprise Financial, Inc. (NYSE:AMP)
Gillson Capital’s Stake Value: $18.001 million
Percentage of Gillson Capital’s 13F Portfolio: 1.68%
Number of Hedge Fund Holders: 37
Ameriprise Financial, Inc. provides its services in wealth management, asset management, annuities, insurance, and estate planning. Major subsidiaries of this company include Ameriprise Financial Services, RiverSource Life Insurance Company, and Columbia Threadneedle Investments. The company is one of the biggest banks in the United States. It was incorporated in 2005 and is placed sixth on the list of 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital. Ameriprise Financial, Inc. currently has a market capitalization value of $30.84 billion. Gillson Capital holds 72,328 shares in Ameriprise Financial, Inc. which is worth over $18 million and represents 1.68% of their portfolio.
5. SVB Financial Group (NASDAQ:SIVB)
Gillson Capital’s Stake Value: $18.471 million
Percentage of Gillson Capital’s 13F Portfolio: 1.72%
Number of Hedge Fund Holders: 49
On August 10, SVB Financial Group (NASDAQ: SIVB) offered its public offering of 2.2 million shares at a price of $564 per share. The proceeds from the offering are to go towards corporate purposes and supporting capital ratios at both SVB Financial Group and Silicon Valley Bank.
The hedge fund managed by Daniel Johnson holds close to 33,195 shares in SVB Financial Group that are worth over $18 million. The hedge fund sentiment of SVB Financial Group has increased. 49 funds tracked by Insider Monkey held stakes in the company by the end of the second quarter of 2021.
Artisan Partners, a high value-added investment management firm, published its ‘Artisan Mid Cap Fund’ first quarter 2021 investor letter in which it mentioned SVB Financial Group. Here is what the letter said:
“Among our top contributors was SVB Financial. SVB Financial Group is a leading provider of banking services to the innovation economy across the US and in key international markets. Headquartered in Silicon Valley, SVB offers financial products to clients in technology, life science/health care, and private equity/venture capital. Total client funds increased 51% to $243 billion in 2020—one of the company’s strongest years—as investors seek differentiated returns in innovative private companies. SVB’s high level of client service and long experience in the industry give it not only a historical data and knowledge advantage but also a reputational edge. We believe this enables the company to quickly bring products to market and make speedy underwriting decisions. Given SVB’s strong profit growth comes at a time when net interest margins are depressed, we believe shares are priced attractively and added to our position.”
4. Capital One Financial Corporation (NYSE:COF)
Gillson Capital’s Stake Value: $18.847 million
Percentage of Gillson Capital’s 13F Portfolio: 1.76%
Number of Hedge Fund Holders: 64
Capital One Financial Corporation is a holding company that has expertise in auto loans, credit cards, banking, and saving accounts. The company was incorporated in 1994 and ranks fourth on the list of 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital.
On July 22, Capital One Financial Corporation reported earnings for the second quarter of 2021. It declared earnings per share of $ $7.71, beating the market predictions by $3.17. In addition, revenue for the second quarter was $7.37 billion, up 12.48% year over year, beating the estimates by over $249 million.
Harris Associates owns more than 6.2 million shares of Capital One Financial Corporation and is, therefore, the biggest shareholder of the company. Gillson Capital currently owns 121,834 shares in the company, which amounts to a worth of $18.847 million.
ClearBridge Investments, an investment management firm, published its Q2 2021 investor letter in which it mentioned Capital One Financial Corporation. Here is what to say about the company:
“Portfolio holdings in the communication services and financial sectors also made strong contributions… In financials, Capital One has also benefited, at least indirectly, from government stimulus that has strengthened customer balances sheets and driven credit losses to record lows. Capital One should also benefit from a reopening of the economy and increased discretionary spending.”
3. Signature Bank (NASDAQ:SBNY)
Gillson Capital’s Stake Value: $24.387 million
Percentage of Gillson Capital’s 13F Portfolio: 2.28%
Number of Hedge Fund Holders: 43
Daniel Johnson’s Gillson Capital holds 99,276 shares in Signature Bank (NASDAQ: SBNY), worth over $24 million, representing 2.28% of their portfolio. The hedge fund has increased stakes in the firm by a massive 42% in the second quarter of 2021. 43 funds tracked by Insider Monkey held stakes in the company at the end of the second quarter of 2021. Based on our calculations, Signature Bank ranks third in our list of the 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital.
Harding Loevner, an investment management firm, published its “Global Small Companies Equity Fund” second-quarter 2021 investor letter and discussed its stance on Signature Bank. Here is what Harding Loevner has to say about the firm in its Q2 2021 investor letter:
“First Republic is a large cap company now, but it was a small cap less than ten years ago. Our challenge for the Global Small Companies strategy is to find the next First Republic. Signature Bank, which operates primarily in the large and highly penetrated New York City metro market, is a contender. Many of its clients are small- and medium-sized businesses, with a significant number in commercial real estate and apartment buildings. Rather than 1-800 numbers and phone trees, each Signature client has a single point of contact with a relationship manager and his or her team, who service all of the client’s needs. Signature’s relationship managers have lending authority, and their compensation is linked to their own results. This structure served Signature and its clients well during the pandemic, which was expected to be a disaster for the bank’s commercial real estate portfolio. Its loan deferrals, which peaked at 26% of loans in July 2020, fell to 1.9% by March of this year as the bank worked individually with clients to return them to regular payment status.
Signature’s client relationships also led them to new growth opportunities in cryptocurrency. Three years ago, the bank began offering a digital system to meets its clients need for round-the-clock payments. This eventually led the bank to offer crypto-based payments, services also useful to cryptocurrency exchanges and other players in the digital currency space, which are now using the Signature system and making substantial deposits into the bank.”
2. The Bank of New York Mellon Corporation (NYSE:BK)
Gillson Capital’s Stake Value: $25.967 million
Percentage of Gillson Capital’s 13F Portfolio: 2.43%
Number of Hedge Fund Holders: 52
On September 30, The Bank of New York Mellon Corporation initiated a strategic investment in a data and analytics software firm named Quantexa Technology in an attempt to digitalize its services and processes. The investment was made after a year-long engagement during which The Bank of New York Mellon Corporation used Quantexa’s Graph Network Intelligence, Artificial Intelligence, Master Data Management, and Entity Resolution.
On July 15, The Bank of New York Mellon Corporation declared earnings for the second quarter of 2021. It posted earnings per share of $1.13, beating the estimates by $0.13. Similarly, the revenue was announced to be $3.96 billion which beat the estimated figure by $98.43 million.
Daniel Johnson’s Gillson Capital holds 506,877 shares in The Bank of New York Mellon Corporation worth over $25 million, representing 2.43% of their portfolio. Warren Buffett’s Berkshire Hathaway is the leading shareholder in The Bank of New York Mellon Corporation, with over 72 million shares worth more than $3 billion.
1. Raymond James Financial, Inc. (NYSE:RJF)
Gillson Capital’s Stake Value: $ 35.796 million
Percentage of Gillson Capital’s 13F Portfolio: 3.35%
Number of Hedge Fund Holders: 29
Raymond James Financial, Inc. (NYSE: RJF) is an American company that not only provides investment services but also financial services to municipalities, corporations, and individuals. The company is among the largest banking institutions in the United States with its headquarters based in St. Petersburg, Florida, and is given first place in our list of 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital.
Raymond James Financial, Inc. currently has an $18.99 billion market capitalization. On July 28, the company posted earnings per share of $1.83 which beat the estimated EPS by $0.25.
On August 25, Raymond James Financial, Inc. achieved a new record in financial assets under management as the equity market appreciated. The company’s client AUA increased in value from $908.2 billion in Q2 2020 to $1.18 trillion by the end of the second quarter in 2021.
The hedge fund chaired by Daniel Johnson holds 275,564 shares in Raymond James Financial, Inc. currently worth over $35 million which represents 3.35% of their portfolio. In addition, Gillson Capital increased stakes in the firm by 20% by the end of the second quarter of 2021. Glenn Greenberg’s Brave Warrior Capital is a leading shareholder in Raymond James Financial, Inc., with over 1.6 million shares that are worth more than $211 million.
You can also take a peek at the 15 Dividend Stocks People Buy for Early Retirement and 10 Best Tech ETFs to Buy According to Reddit.
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This article is originally published at Insider Monkey.
