Davis Funds, an investment management firm, published its “Davis Opportunity Fund” fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 7.43% was recorded by the fund’s Class A shares for the year end of 2020, below its S&P 500 benchmark that delivered an 18.40% gains in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Davis Opportunity Fund, in their Q4 2020 investor letter, mentioned Capital One Financial Corporation (NYSE: COF) and shared their insights on the company. Capital One Financial Corporation is a McLean, Virginia-based bank holding company that currently has a $60.5 billion market capitalization. Since the beginning of the year, COF delivered a 34.30% return, impressively extending its 12-month gains to 134.06%. As of April 06, 2021, the stock closed at $132.03 per share.
Here is what Davis Opportunity Fund has to say about Capital One Financial Corporation in their Q4 2020 investor letter:
“Capital One Financial should see operating results improve, given an eventual tapering of credit losses over time, yet are priced as though the currently depressed run rates of earnings will persist for the long term. Any improvement in the yield curve would be very favorable for financial lending institutions as well, and that scenario is not really priced in today. In other words, there are multiple ways to win, and the upside potential we see in this group, beginning at near-recessionary valuations, makes financials a particularly high-conviction area of the Portfolio.”
Our calculations show that Capital One Financial Corporation (NYSE: COF) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Capital One Financial Corporation was in 56 hedge fund portfolios, compared to 42 funds in the third quarter. COF delivered a 23.64% return in the past 3 months.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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Disclosure: None. This article is originally published at Insider Monkey.