Financial Guru’s Fund Betting on These Stocks: Bank of America Corp (BAC), Taylor Capital Group Inc (TAYC)

…net income was down due to increased tax expenses, might be responsible. Nonetheless, Brown increased his position in Taylor Capital by 7% in Q4 according to his latest 13F filing, and given his expertise in the banking sector, it’s an intriguing contrarian play.

Coming in fourth is The Bancorp, Inc. (NASDAQ:TBBK), and while the choice of Taylor Capital Group in Brown’s portfolio may leave some scratching their heads, Bancorp appears to be a no-brainer. The stock enjoys a trifecta of bullish indicators: (1) technicals are strong, (2) net income has increased fourfold over the past three years, and (3) earnings are up from the year prior. There are a few caveats, however, in regard to Bancorp, like its price-to-book of 1.6, 60% higher than its industry’s average. The stock’s earnings multiple is even more overvalued, at more than twice that of the banking sector’s norms. Still, all in all, Bancorp is a keeper from a momentum standpoint, and it’s no wonder Brown upped his position by 11% in Q4.

Lastly, at number five is Primus Guaranty, Ltd. (PINK:PRSG). Since the company decided to de-list from the NYSE in 2011 in an effort to cut expenses, the stock has moved consistently higher from a $4.20 low in late 2011 to a $9.72 high in recent weeks. Things seem to have leveled off, however, since the release of FY2012 earnings, which fell by 39% from one year earlier. Brown and Second Curve cut their exposure to Primus by 14% in the fourth quarter, making it the only stock in Brown’s top five that he was bearish on.

History proves that Brown’s expertise in financial stocks is unrivaled and it’s said that he turned a $130,000 investment by his father into $18 million by 2003. We’re not sure if any of these picks can generate quite that return, but it’s worth paying attention to this hedgie nonetheless.

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