We recently compiled a list of the 10 Best Holding Company Stocks To Buy Now. In this article, we are going to take a look at where Citigroup Inc. (NYSE:C) stands against the other holding company stocks.
“The Market is Anticipating Too Much”
Some may think the Fed meeting on the 18th of September may have put an end to the basis point cut debate, however, while the Fed did initiate a rate cut by half a percentage, two Fed meetings are remaining before the end of 2024. To discuss the likely rate cut path, Chris Versace, Tematica Research CIO, appeared in an interview on Yahoo Finance on September 24.
Versace suggests that it is quite impossible to predict the path the Fed is to adopt before 2024 ends and the decision will likely be more reliant on data. The labor market weakened for the second consecutive month and, according to him, the Fed will probably go for another 50 basis point cut, if not more.
He urges investors and traders to triangulate all data points to make decisions including economic data, inflation data, and the speed at which the economy is growing. Versace states that the market right now is stretched and that there is more to the bigger picture such as the upcoming elections, earnings growth, and the Fed’s decisions.
“Volatility Should Remain Elevated”
On September 25, Burns McKinney, NFJ Investment Group Managing Director & Senior Portfolio Manager, appeared in an interview on Yahoo Finance to discuss the market outlook. Amid declining consumer confidence and a shrinking job market, volatility, according to him, will remain a constant element.
He suggested that signs of job weakness coupled with inflation have impacted consumer confidence negatively, especially after the Fed’s decision. McKinney added that there is a disequilibrium in the number of jobs vacant and the number of workers available right now, leading to weakened employment data.
From an investor standpoint, he deems volatility a constant state of the market, given that the country also has an upcoming election in the coming weeks. In addition to that, geopolitical tensions in Europe and the Middle East will likely add to the turmoil. McKinney shares that investors should focus more on dividend-paying stocks to remain secure and resilient through the volatility.
Despite the turmoil, some stocks may always be promising given their strong footing and dominance in the industry. With that, let’s take a look at the 10 best holding company stocks to buy now.
Our Methodology
To come up with the 10 best holding company stocks to buy now, we examined multiple rankings on the internet and our rankings. We then ranked the top 10 based on the largest number of hedge fund holders at the end of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of financial advisors huddled around a desk, discussing the best investment strategy for their client.
Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 85
Citigroup Inc. (NYSE:C) is one of the best holding company stocks to buy now. The investment banking giant is based in New York and engages in the provision of asset management services, risk management services, investment management services, mortgage loans, credit cards, and other banking commodities. Some of its subsidiaries include Citibank, Banamex, and Citicorp LLC, to name a few.
Citigroup Inc. (NYSE:C) has an on-ground presence in 90 countries, issues currencies in 144 countries, and has trading floors in 77 countries. Despite having such an extravagant network, the company is strongly inclined to expand. Not only did Citigroup Inc. (NYSE:C) launch commercial banking services in Japan, but it also collaborated with Emirates NBD, allowing corporate and retail clients in the Middle East, North Africa, and Turkiye to make USD payments anytime they want.
In the second quarter of 2024, the company logged $20.1 billion in revenue and $3.2 billion in net income, up from $19.4 billion in revenue and $2.9 billion in net income from Q2 2023. Of this, its investment banking segment showed promising results and increased revenue by 38%.
Overall, Citigroup Inc. (NYSE:C) is one of the most important names in the banking sector because of its expansive network and strong ecosystem. The company continues to enhance its position by initiating strategic partnerships with entities from across the globe.
Analysts are also bullish on C and their 12-month median price target of $71 points to a 16% upside from current levels. In Q2 2024, there were 85 hedge funds that held positions in the stock with total stakes amounting to $10.64 billion. As of June 30, Berkshire Hathaway was the largest shareholder with a position worth $3.51 billion.
Patient Capital Management stated the following regarding Citigroup Inc. (NYSE:C) in its first quarter 2024 investor letter:
“Citigroup Inc. (NYSE:C) gained 24.1% in the quarter continuing its uptrend from 4Q. The company is on a multi-year journey to reorganize the business and reach return on tangible common equity of 11-12% by 2026 (and higher further out). Citigroup is finally taking the hard actions necessary, cutting unprofitable departments, taking out middle management layers, and reducing overall headcount. As of early March, the company was 70% done with its business exits and had reduced management layers by 1/4th. We have high confidence Citi will hit its targets. In the meantime, the company is returning cash to shareholders, which could meaningfully increase if the Basel III capital proposal is changed.”
Overall C ranks 5th on our list of the best holding company stocks to buy. While we acknowledge the potential of C as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than C but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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