Jeremy Grantham’s 5 Favorite Stocks

In this article, we discuss Jeremy Grantham’s top 5 favorite stocks. If you want to see more stocks in this selection, click “Super Bubble” is Yet to Burst: Jeremy Grantham’s Warning and His 10 Favorite Stocks. 

5. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Holders: 83

Jeremy Grantham’s Stake Value: $404.56 Million

Wells Fargo & Company (NYSE:WFC) is a California-based diversified financial services company, operating through four segments – Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management. Jeremy Grantham’s Q2 portfolio features 10.33 million Wells Fargo & Company (NYSE:WFC) shares worth $404.56 million, representing 2.3% of the total 13F securities. 

On July 17, Barclays analyst Jason Goldberg maintained an Overweight rating on Wells Fargo & Company (NYSE:WFC) but lowered the price target on the stock to $58 from $64 after the Q2 results. Pressured fee income, followed by a larger than modeled provision impacted June quarter results, the analyst informed investors. 

According to Insider Monkey’s data, 83 hedge funds were long Wells Fargo & Company (NYSE:WFC) at the end of June 2022, compared to 93 funds in the last quarter. Boykin Curry’s Eagle Capital Management is the biggest position holder in the company, with more than 18 million shares worth $709.3 million. 

Here is what Davis Opportunity Fund has 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.”