5 Most Undervalued Bank Stocks To Buy According To Hedge Funds

2. Bank of America Corporation (NYSE:BAC)

Number of Hedge Fund Holders: 97

P/E Ratio as of January 20: 10.42

Bank of America Corporation (NYSE:BAC) is an American multinational investment bank and financial services holding company that caters to individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide. Bank of America Corporation (NYSE:BAC) is one of the most undervalued bank stocks to invest in according to elite hedge funds. 

On January 13, Bank of America Corporation (NYSE:BAC) reported Q4 GAAP earnings per share of $0.85 and a revenue of $24.53 billion, outperforming Wall Street estimates by $0.08 and $360 million, respectively. Net interest income increased by $3.3 billion, or 29%, to $14.7 billion, supported by higher interest rates, lower premium amortization expense, and solid loan growth.

Citi analyst Keith Horowitz on January 17 raised the price target on Bank of America Corporation (NYSE:BAC) to $38 and maintained a Neutral rating on the shares. He was surprised to see the stock outperform on the earnings report despite negative sentiment heading into the Q4 season and the downside to the EPS consensus revisions. 

According to Insider Monkey’s third quarter database, 97 hedge funds were long Bank of America Corporation (NYSE:BAC), compared to 99 funds in the earlier quarter. Harris Associates is a prominent stakeholder of the company, with 41.8 million shares worth $1.26 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.”