In this article we will be taking a look at the 16 best financial stocks to buy according to hedge funds. To skip our detailed analysis of the financial sector, you can go directly to see 5 Best Financial Stocks To Buy According to Hedge Funds.
A Fed Pivot And What It Means For Big Banks
The financial sector went through a good amount of volatility last year, and many are now beginning to wonder whether the volatility will continue in 2024. No one can fully predict the likelihood of this happening, and yet for some, it may not be an unlikely development. However, this January, CEOs from major big banks made statements highlighting their hopes for the financial sector in 2024, particularly for big banks, in the event of a Federal Reserve “pivot” on their interest rate hikes.
On January 20, CNBC’s “Power Lunch” highlighted some statements made by several big bank CEOs on this matter. Goldman Sachs Group, Inc.’s (NYSE:GS) CEO, David Solomon, made the following comments:
“It’s hard for me to see the market’s view of seven cuts this year. I do think there’s a reasonable possibility of some interest rate cuts and some easing. But it’s really gonna be dependent on what the data says and how the economy transmits through the year.”
Morgan Stanley’s (NYSE:MS) CEO, Ted Pick, also made a few comments on the subject:
“I do think we are probably past peak inflation. What’s interesting though is that it is not inconceivable that we have to go faster, i.e., 50 basis points, if you sort of price that as 5% or 10%.”
Banks Gaining Confidence in Loaning
Huntington Bancshares CEO, Steve Steinour, joined CNBC’s “Power Lunch” on January 20 to discuss the above as well. On the impact of rate cuts on the financial sector, Steinour made the following comments:
“If it’s three or four cuts, it’s helpful. If it’s six or seven, that might imply a soft economy and that would not be helpful to us or anyone else. But we model it both ways, and in either direction, we’ve got a very tight net interest margin – part of that through hedging.”
These observations brought Steinour to several conclusions, the most important one being that in the light of a Fed pivot, big banks will gain confidence in loaning to the general public. Generally speaking, Steinour believes that business is good in the banking sector so far this year. He noted that on multiple indicator fronts, including housing prices, things are continuing to look good, the consumer is still seen to be reasonably strong, and businesses are continuing to have a good year. The Federal Reserve’s rate pivot in this atmosphere is thus considered to be helpful.
Considering these observations, investors in the financial sector can expect financial stocks, including big bank stocks, to have a strong start to the year. As such, we have compiled a list of some of the best financial stocks to buy now. These include renowned banking companies such as Wells Fargo & Company (NYSE:WFC), Morgan Stanley (NYSE:MS), and Goldman Sachs Group, Inc. (NYSE:GS), alongside asset management companies, financial risk assessment companies, and more. Our list thus includes some of the best financial stocks to invest in for the long term and some of the best financial stocks to buy in 2024.
A series of ATMs in a row, symbolizing the company’s 24/7 banking services.
Our Methodology
We selected the stocks for our list of the best financial stocks to buy by consulting Insider Monkey’s hedge fund data for the fourth quarter of 2023. The stocks are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest number. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Best Financial Stocks To Buy According to Hedge Funds
16. BlackRock, Inc. (NYSE:BLK)
Number of Hedge Fund Holders: 48
BlackRock, Inc. (NYSE:BLK) is an asset management and custody banks company based in New York. It operates as an investment manager offering services to institutional, intermediary, and individual investors.
On January 16, Bill Katz at TD Cowen upgraded BlackRock, Inc. (NYSE:BLK) from Market Perform to Outperform and announced a $938 price target on the stock.
BlackRock, Inc. (NYSE:BLK) was seen in the 13F holdings of 48 hedge funds in the fourth quarter, with a total stake value of $2.9 billion.
The London Company mentioned BlackRock, Inc. (NYSE:BLK) in its fourth-quarter 2023 investor letter:
“BlackRock, Inc. (NYSE:BLK) – BLK rallied in 4Q after underperforming earlier in the year. BLK performance from quarter to quarter is often a function of market performance, which…
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