5 Best Holding Company Stocks To Invest In

In this article, we discuss 5 best holding company stocks to invest in. If you want to see more stocks in this selection, check out 12 Best Holding Company Stocks To Invest In. 

5. The Charles Schwab Corporation (NYSE:SCHW)

Number of Hedge Fund Holders: 75

The Charles Schwab Corporation (NYSE:SCHW), through its subsidiaries, provides wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The company operates in two segments, Investor Services and Advisor Services. The Charles Schwab Corporation (NYSE:SCHW) was incorporated in 1971 and is headquartered in Westlake, Texas. It is one of the best holding company stocks to monitor. 

On January 4, Alexander Blostein, a Goldman Sachs analyst, upgraded The Charles Schwab Corporation (NYSE:SCHW) from Neutral to Buy and set a $98 price target for the stock. According to the analyst, the company’s deposit balances are expected to trough by mid-2023, which will “unlock significant earnings power.” The analyst forecasts Schwab’s annual earnings growth to be greater than 20% over the next two years, “with sustainable tailwinds beyond that.”

According to Insider Monkey’s third quarter database, 75 hedge funds were bullish on The Charles Schwab Corporation (NYSE:SCHW), compared to 68 funds in the prior quarter. Rajiv Jain’s GQG Partners is the leading stakeholder of the company, with 16.5 million shares worth $1.19 billion.  

Ariel Investment made the following comment about The Charles Schwab Corporation (NYSE:SCHW) in its Q3 2022 investor letter:

“Shares of financial services provider The Charles Schwab Corporation (NYSE:SCHW) also traded higher following the delivery of a top and bottom-line earnings beat, an increase in its quarterly dividend and the announcement of a significant stock repurchase program. We believe the company will continue to weather various macro and competitive pressures in a rising rate environment by flexing its scale and customer-centric focus in support of its industry leading cost advantage. We also think the TD Ameritrade acquisition will create incremental value and further enhance SCHW’s marketplace standing and long-term growth trajectory.”

4. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Holders: 77

Wells Fargo & Company (NYSE:WFC) is a diversified financial services holding company that provides banking, investment, mortgage, and consumer and commercial finance products and services in the United States and internationally. The company reported its Q4 2022 financial results on January 13, announcing a GAAP EPS of $0.67, beating estimates by $0.06. However, Wells Fargo & Company (NYSE:WFC)’s revenue of $19.66 billion missed Wall Street consensus by $380 million. 

On January 11, after Wells Fargo & Company (NYSE:WFC) disclosed a strategic realignment of its mortgage banking business that includes concluding the correspondent mortgage banking channel and trimming the size of the bank’s mortgage servicing portfolio, Morgan Stanley analyst Betsy Graseck said the shift “doesn’t move the EPS needle,”  and expects Wells Fargo & Company (NYSE:WFC) to redirect capital associated with correspondent mortgage banking to retail mortgage production. The analyst maintained an Overweight rating and a $58 price target on Wells Fargo & Company (NYSE:WFC) shares.

According to Insider Monkey’s Q3 data, 77 hedge funds were bullish on Wells Fargo & Company (NYSE:WFC), compared to 83 funds in the prior quarter. Boykin Curry’s Eagle Capital Management is the biggest stakeholder of the company, with more than 23 million shares worth $928 million. 

Here is what Oakmark Funds specifically said about Wells Fargo & Company (NYSE:WFC) in its Q3 2022 investor letter:

“Wells Fargo & Company (NYSE:WFC) has been a long-time holding in the Oakmark Fund. Despite the positives of higher interest rates and the company making good progress on reducing expenses and regulatory consent orders, Wells Fargo shares have fallen one-third from their highs earlier this year to roughly 6.5x our estimate of normalized earnings power, and the stock ended the quarter at ~1x next year’s tangible book value. We find this is far too cheap for a strong banking franchise capable of tangible returns in the low-to-mid teens across business cycles.”

3. Bank of America Corporation (NYSE:BAC)

Number of Hedge Fund Holders: 97

Bank of America Corporation (NYSE:BAC) is an American multinational investment bank and financial services holding company that provides banking and financial products and services to individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide. On January 13, Bank of America Corporation (NYSE:BAC) reported a Q4 GAAP EPS of $0.85 and a revenue of $24.53 billion, outperforming Wall Street estimates by $0.08 and $360 million, respectively. It is one of the premier holding company stocks to invest in. 

On January 3, Barclays analyst Jason Goldberg maintained an Overweight rating on Bank of America Corporation (NYSE:BAC) but lowered the firm’s price target on the shares to $48 from $51. Similarly, Odeon Capital analyst Dick Bove upgraded the stock on January 10 to Buy from Hold with a $38.44 price target.

According to Insider Monkey’s data, Bank of America Corporation (NYSE:BAC) was part of 97 hedge fund portfolios at the end of the third quarter of 2022, compared to 99 in the last quarter. Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with more than 1 billion shares worth $30.5 billion. 

Ariel Investment made the following comment about Bank of America Corporation (NYSE:BAC) in its Q3 2022 investor letter:

“We initiated three new positions in the quarter. We added leading financial institution Bank of America Corporation (NYSE:BAC) which serves individual consumers, small and middle-market businesses, and large corporations with a full range of banking, investing, asset management, and other financial and risk management products and services. The current company was formed through various mergers including NationsBank, FleetBoston, US Trust, Countrywide Financial, and Merrill Lynch with the legacy commercial bank to form a national banking powerhouse and bulge bracket investment firm. As one of the ‘Big Four’ U.S. banks it enjoys scale driven cost advantages and economies of scale which provide meaningful competitive advantages and potential for strong returns in the largely commoditized banking industry. A survivor of the financial crisis, BAC has emerged with a solid capital base and stands to benefit from a rising interest rate environment.”

2. Berkshire Hathaway Inc. (NYSE:BRK-A)

Number of Hedge Fund Holders: 104

Berkshire Hathaway Inc. (NYSE:BRK-A) is an American multinational conglomerate holding company that engages in the insurance, freight rail transportation, and utility businesses worldwide through its subsidiaries. Berkshire Hathaway Inc. (NYSE:BRK-A) was incorporated in 1998 and is headquartered in Omaha, Nebraska. It is one of the best holding company stocks to buy. 

Keefe Bruyette analyst Meyer Shields on November 6 reiterated a Market Perform rating on Berkshire Hathaway Inc. (NYSE:BRK-A) and trimmed the firm’s price target on the shares to $495,000 from $500,000. The company’s Q3 operating earnings strongly outperformed estimates, reflecting higher than expected Insurance underwriting income and Manufacturing, Service, and Retailing earnings, the analyst told investors in a research note.

Among the hedge funds tracked by Insider Monkey, 104 funds were long Berkshire Hathaway Inc. (NYSE:BRK-A) at the end of September 2022, compared to 109 in the prior quarter. Bill & Melinda Gates Foundation Trust is the biggest stakeholder of the company, with approximately 30 million shares worth nearly $8 billion. 

Here is what Black Bear Value Fund has to say about Berkshire Hathaway Inc. (NYSE:BRK-A) in its Q3 2022 investor letter:

“Going forward I expect Berkshire to compound at above average returns from this price. BRK is a collection of high-quality businesses, excellent management, and a good amount of optionality in their cash position. If the cash were to be deployed accretively, the true value would be greater than an 8% premium (as mentioned above). The combination of a pie that is growing, an increasing share of said pie due to stock buybacks, upside optionality from cash and a tight range of likely business outcomes that span a variety of economic futures gives me comfort in continuing to own Berkshire.”

1. JPMorgan Chase & Co. (NYSE:JPM)

Number of Hedge Fund Holders: 110

JPMorgan Chase & Co. (NYSE:JPM) is an American multinational financial services company that operates through four segments – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management. On January 13, JPMorgan Chase & Co. (NYSE:JPM) reported a Q4 non-GAAP EPS of $3.56 and a revenue of $34.5 billion, outperforming Wall Street forecasts by $0.46 and $270 million, respectively. The company also expects to resume stock buybacks this quarter and aims for $12 billion stock repurchases this year. It is one of the best holding company stocks to invest in. 

On January 3, Barclays analyst Jason Goldberg raised the firm’s price target on JPMorgan Chase & Co. (NYSE:JPM) to $189 from $162 and reiterated an Overweight rating on the shares.

According to Insider Monkey’s data, 110 hedge funds were bullish on JPMorgan Chase & Co. (NYSE:JPM) at the end of Q3 2022, compared to 104 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the leading stakeholder of the company, with 7.85 million shares worth $821 million. 

Here is what Vltava Fund has to say about JPMorgan Chase & Co. (NYSE:JPM) in its Q3 2022 investor letter:

“We regard JPM to be the strongest and best- managed bank in the world. It is a leader in investment banking, commercial banking, credit cards, and asset management. Its size (the largest bank in the USA, with nearly USD 4,000 billion in assets) and diversification give it a strong competitive advantage that is compounded by its cost advantages and the high costs to clients associated with switching banks. JPM’s management prides itself on running the only large bank to avoid major instability over the long term.

JP Morgan’s quality and strength first became fully evident in 2008 under the leadership of its CEO Jamie Dimon. Not only did JP Morgan help to stabilize the market by taking over the failing Bear Stearns in the spring of that year, but throughout the Great Financial Crisis it was the only big US bank that did not require government assistance and it was highly profitable even in the difficult year of 2008.

A well-functioning and efficient bank can be a very good long-term investment, because the interest compounding effect works well here. JPM’s return on equity (ROE) is well into the double digits and this puts it in a good position to continue producing better long-term returns than does the market. JPM has been very profitable even during years when interest rates were close to zero. The current – and perhaps not temporary – return to somewhat more normal, higher interest rates should have a significantly positive impact on the bank’s interest income and overall profitability.”

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also check out 10 Stocks with Biggest Buybacks and 20 Biggest Natural Resources Companies in the World.