5 Best Mortgage Stocks To Buy Now

4. Citigroup Inc. (NYSE: C)

For those looking to use mortgage lending services of major banks, Citigroup is a viable option. With a market cap of $137 billion, Citi offers some of the best and advanced home mortgage services in the U.S. In the housing crisis of 2008, Citigroup collapsed mainly due to its problematic mortgage-backed securities. But the bank has since improved its internal mechanisms. Jane Fraser was recently appointed as the new CEO of the bank.

There were 95 hedge funds in our database that held stakes in Citigroup Inc., compared to 91 funds in the third quarter. Khan Brothers is the biggest stakeholder in the company. Citigroup Inc. ranks 26th in our list of the 30 Most Popular Stocks Among Hedge Funds: 2020 Q4 Rankings.

Oakmark Select Fund, in their Q3 2020 Investor Letter, said that they were able to distinguish value in Citigroup Inc. (NYSE: C) and still maintains their position in the company even after a bad performance during the pandemic.

Here is what Oakmark Select Fund has to say about Citigroup Inc. in their investor letter:

“Citigroup was our largest detractor for the period due to Covid-19-related concerns that have hurt the entire financial sector, as well as a handful of Citigroup-specific headlines that amplified near-term uncertainty. We believe that investors’ short-term focus can cause them to miss the bigger picture. The company has remained profitable throughout the Covid-19 crisis to date. It continues to operate with significant excess capital relative to regulatory minimums, even as it has added more than $10.5B to credit reserves year to date. We believe the company is proving its resilience during a real-life stress test. Yet, despite this positive early evidence, Citigroup currently trades at only 60% of tangible book value and slightly over 5x 2019 earnings per share. Given that we think the company’s normalized earnings power is greater than what it achieved in 2019, we find these valuation metrics especially attractive. As we move beyond the pandemic, we think investors’ focus will shift to the underlying quality of the business and they will value the resilience Citigroup demonstrated during this crisis.”