In this article we discuss the 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital. If you want to skip our detailed analysis of Gillson Capital’s history, investment philosophy, and hedge fund preference, go directly to 5 Best Financial Services and Bank Stocks to Buy According to Daniel Johnson’s Gillson Capital.
Daniel Bartlett Johnson is the founder and portfolio manager at Gillson Capital, a hedge fund based in Chicago.
As of Q2 of 2021, Gillson Capital has stakes in several big companies like W. R. Berkley Corporation (NYSE: WRB), The Bank of New York Mellon Corporation (NYSE: BK), and Capital One Financial Corporation (NYSE: COF).
Based on the latest 13F holdings for the second quarter of 2021, Gillson Capital owns 388,524 shares in W. R. Berkley Corporation (NYSE: WRB) worth $28.918 million. Moreover, Gillson Capital has increased its stake in W. R. Berkley Corporation (NYSE: WRB) by 7% since the end of the previous quarter.
In The Bank of New York Mellon Corporation (NYSE: BK), Daniel Johnson’s fund owns 26,170 shares. The investment covers 2.43% of the fund’s portfolio. On September 30, The Bank of New York Mellon Corporation (NYSE: BK) initiated a strategic investment in a data and analytics software firm named Quantexa Technology in an attempt to digitalize its services and processes.
Another notable stock in Daniel Johnson’s portfolio is Capital One Financial Corporation (NYSE: COF). The investor owns an $18.847 million stake in the company. On July 22, Capital One Financial Corporation (NYSE: COF) reported earnings for the second quarter of 2021. It declared earnings per share of $7.71, beating the market predictions by $3.17. In addition, revenue for the second quarter was $7.37 billion, up 12.48% year over year, beating the estimates by over $249 million.
Photo by Austin Distel on Unsplash
Why should we follow Johnson’s stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Keeping all these points in mind, let’s start our list of the 10 best stocks to buy according to Daniel Johnson’s Gillson Capital. We used Johnson’s 13F portfolio for the second quarter of the year 2021 for this analysis.
10 Best Financial Services and Bank Stocks to Buy According to Daniel Johnson’s Gillson Capital
10. Bank of America Corporation (NYSE:BAC)
Gillson Capital’s Stake Value: $11.605 million
Percentage of Gillson Capital’s 13F Portfolio: 1.08%
Number of Hedge Fund Holders: 87
The Bank of America Corporation (NYSE: BAC) is headquartered in the state of North Carolina. The primary services of this bank include wealth management, commercial banking, and investment banking. The company posted year-on-year revenue growth of 13.3% in 2021.
At the end of the second quarter, there were 87 hedge funds in Insider Monkey’s database that held stakes in Bank of America Corporation (NYSE: BAC) as compared to 97 hedge funds by the end of the first quarter. Martin Taylor’s Crake Asset Management owns 1.13 million shares of Bank of America Corporation and is, therefore, the biggest shareholder of the company. Gillson Capital currently owns 281,465 shares in the company, which amounts to a worth of $11.605 million.
ClearBridge Investments, in its first-quarter 2021 investor letter, mentioned Bank of America Corporation (NYSE: BAC). Here is what the fund said:
“Higher long-term interest rates supported financials such as Bank of America, which has shown both defensive and offensive characteristics in the past year. We believe it continues to be the least risky large bank from a credit standpoint, with conservative underwriting and controlled risk-taking, a leading consumer deposit franchise, scale, and technology. It is also a leader in its commitments to sustainability, or as it terms it, responsible growth. Disclosure and reporting at all levels form a large part of this commitment, including gender diversity and equality, environmental commitments, and support of communities in which it operates. In the first quarter, Bank of America announced it is setting a goal of net-zero greenhouse gas (GHG) emissions in its supply chain and operations, and notably also in its financing activities, before 2050.”
9. American Financial Group, Inc. (NYSE:AFG)
Gillson Capital’s Stake Value: $13.438 million
Percentage of Gillson Capital’s 13F Portfolio: 1.25%
Number of Hedge Fund Holders: 19
American Financial Group, Inc. (NYSE: AFG) is placed ninth on our list of 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital. According to the latest filings, Millennium Management owned 635,311 shares in the company at the end of the second quarter of 2021 worth $79.2 million, representing 0.04% of the portfolio. Gillson Capital’s stake in the company includes 107,748 shares and is valued at $13.438 million.
In September 2021, American Financial Group, Inc. (NYSE: AFG) announced a special dividend of $4 per share instead of its prior dividend of $2.00.
At the end of the second quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes in American Financial Group, Inc. (NYSE: AFG), down from 21 after the preceding quarter.
Just like W. R. Berkley Corporation (NYSE: WRB), The Bank of New York Mellon Corporation (NYSE: BK), and Capital One Financial Corporation (NYSE: COF), American Financial Group, Inc. (NYSE: AFG) is one of the most significant stocks in Gillson Capital’s portfolio.
In its Q1 2021 investor letter, Headwaters Capital Management, an asset management firm, highlighted a few stocks and American Financial Group, Inc. (NYSE: AFG) was one of them. Here is what the fund said:
“American Financial Group is proof that I’m less concerned with whether a stock is a “value” or “growth” stock, but more concerned with the quality of the business and the durability of its earnings power. AFG was the top performer during the quarter as it successfully realized value for its life insurance segment through an announced sale of this business to Mass Mutual. Investors generally disliked AFG’s life insurance business due to its interest rate sensitivity and investment portfolio leverage. As a result, the market was ascribing less than a book value multiple for AFG’s life insurance business despite multiple publicly announced transactions of competitors that valued similar books of business at 1.2x book value (which is ultimately the multiple that Mass Mutual paid). Investor concerns with the life insurance segment presented an opportunity for us to purchase AFG at a discount to fair value with an opportunity to compound capital at a 10-15% annualized rate for many years to come. While I didn’t expect an outright sale of the life insurance business, I applaud management for monetizing this asset and realizing value for shareholders. AFG’s stock outperformed once the sale was announced as the value of this business was higher than the market appreciated.”
8. Voya Financial, Inc. (NYSE:VOYA)
Gillson Capital’s Stake Value: $13.470 million
Percentage of Gillson Capital’s 13F Portfolio: 1.26%
Number of Hedge Fund Holders: 44
Voya Financial, Inc. (NYSE: VOYA) is ranked eighth on our list of 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital. The firm operates from New York and provides services in retirement, investment, and insurance. According to the latest data, Gillson Capital owns 219,028 shares in the company that are worth more than $13.4 million.
Out of all the hedge funds that are being tracked by Insider Monkey, the New York-based investment firm Pzena Investment Management is the leading shareholder in Voya Financial, Inc. (NYSE: VOYA) with more than 4.7 million shares worth over $290 million.
In addition to Discover Financial Services (NYSE: DFS), Bank of America Corporation (NYSE: BAC), and Ameriprise Financial, Inc. (NYSE: AMP), Voya Financial, Inc. (NYSE: VOYA) is one of the 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital.
Greenlight Capital, an investment management company, made significant comments about the stock of Voya Financial, Inc. (NYSE: VOYA) in its Q4 2019 investor letter. Here is what the fund said:
“After six and a half years, we exited our investment in Voya Financial. The position, which had many similarities to BHF, generated a compounded return of 21.7% for the Partnerships. Management executed a successful business repositioning and bought back 53% of its shares outstanding. With the shares trading at a premium to book value and a double-digit P/E multiple, we exited to focus our capital on BHF.”
7. Discover Financial Services (NYSE:DFS)
Gillson Capital’s Stake Value: $17.295 million
Percentage of Gillson Capital’s 13F Portfolio: 1.61%
Number of Hedge Fund Holders: 37
An American financial services company, Discover Financial Services (NYSE: DFS) manages Discover Bank, which not only provides its services in saving accounts but also caters to home equity loans, personal loans, student loans, and credit cards. Incorporated in 1911, it is ranked seventh on the list of 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital. Discover Financial Services (NYSE: DFS) has a market capitalization of $38.026 billion.
6. Ameriprise Financial, Inc. (NYSE:AMP)
Gillson Capital’s Stake Value: $18.001 million
Percentage of Gillson Capital’s 13F Portfolio: 1.68%
Number of Hedge Fund Holders: 37
Ameriprise Financial, Inc. (NYSE: AMP) provides its services in wealth management, asset management, annuities, insurance, and estate planning. Major subsidiaries of this company include Ameriprise Financial Services, RiverSource Life Insurance Company, and Columbia Threadneedle Investments. The company is one of the biggest banks in the United States. It was incorporated in 2005 and is placed sixth on the list of 10 best financial services and bank stocks to buy according to Daniel Johnson’s Gillson Capital. Ameriprise Financial, Inc. (NYSE: AMP) currently has a market capitalization value of $30.84 billion. Gillson Capital holds 72,328 shares in Ameriprise Financial, Inc. (NYSE: AMP) which is worth over $18 million and represents 1.68% of their portfolio.
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Disclosure: None. 10 Best Financial Services and Bank Stocks to Buy According to Daniel Johnson’s Gillson Capital is originally published on Insider Monkey.
