5 Best Undervalued Large-Cap Stocks According to Hedge Funds

In this article, we discuss the 5 best undervalued large-cap stocks according to hedge funds. If you want to read about some more undervalued stocks popular among hedge funds, go directly to 10 Best Undervalued Large-Cap Stocks According to Hedge Funds. 

5. Morgan Stanley (NYSE:MS)

Number of Hedge Fund Holders: 65  

PE Ratio: 10.62

Morgan Stanley (NYSE:MS) is a financial holding firm based in New York. The company beat market estimates on earnings for the fourth quarter of 2021 in January and also raised the target for return on tangible common equity to over 20%, boosting the shares. As interest rates rise, the earnings of Morgan Stanely are expected to get a further boost. The firm is also a reliable dividend play in the high interest rates environment, with a history stretching back more than two decades. In late January, it declared a quarterly dividend of $0.70 per share, in line with previous. The forward yield was 2.92%. 

On April 5, Piper Sandler analyst Jeffrey Harte kept a Neutral rating on Morgan Stanley (NYSE:MS) stock with a price target of $100, lowering the universal estimates for bank earnings amid “capital markets related revenue headwinds and an increase in macro uncertainty and market volatility”. 

At the end of the fourth quarter of 2021, 65 hedge funds in the database of Insider Monkey held stakes worth $4.5 billion in Morgan Stanley (NYSE:MS), the same as in the preceding quarter worth $4.9 billion.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Eagle Capital Management is a leading shareholder in Morgan Stanley (NYSE:MS) with 14.5 million shares worth more than $1.4 billion. 

In its Q3 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Morgan Stanley (NYSE:MS) was one of them. Here is what the fund said:

“Morgan Stanley (NYSE:MS), a leading global financial services company, came into the portfolio in late 2020 as a result of its purchase of E*TRADE. The acquisition is a great fit for Morgan Stanley’s wealth management platform and provides a considerable amount of non-interest-bearing deposit funding. James Gorman, chairman and CEO, has steadily derisked the business by adding less volatile fee streams to complement its leading positions in cyclical businesses such as advisory, equities and FICC (fixed income, currencies and commodities). We believe Morgan Stanley (NYSE:MS) will prove its resiliency and value over the long term.”