Hedge Funds Love These 5 Value Stocks

Wells Fargo & Company (NYSE:WFC) is another financial services company that features on our list of value stocks that hedge funds love.

93 hedge funds from the database of Insider Monkey were stakeholders in Wells Fargo & Company (NYSE:WFC) at the close of the first quarter, with combined holdings worth $6.86 billion. Theleme Partners was the biggest shareholder of the company at the end of Q1 2022, with a stake worth roughly $885 million.

On April 18, Citi analyst Keith Horowitz reiterated a ‘Buy’ rating on Wells Fargo & Company (NYSE:WFC) with a $56 price target. He sees a buying opportunity owing to the recent share price weakness, and thinks the firm’s balance sheet remains very well positioned for higher interest rates.

For the quarter ending March, Wells Fargo & Company (NYSE:WFC) posted earnings per share of $0.88, exceeding estimates by $0.07. The company’s revenue over this period was $17.59 billion, which fell below analysts’ forecasts by $232.4 million.

Here is what Davis Funds had to say about Wells Fargo & Company (NYSE:WFC) in its Q4 2021 investor letter:

“The absolute level of revenues and profits generated by such companies is in fact so large that most of the major financial holdings in the portfolio produce enough annual operating income individually that a number of them could, in theory, purchase several entire businesses among hundreds of choices within the S&P 1500 Index, using just a year’s cash earnings without dipping into capital. This is theoretical, as financial companies would not be in the business of buying healthcare or technology companies, for example, but we point out these facts to illustrate the sheer scale of the economics produced by single financial companies in a given year, which is often a multiple of the cash earnings yielded by companies in a host of other industries.

Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund include Wells Fargo.”