8. Capital One Financial Corporation (NYSE:COF)
Number of Hedge Fund Investors: 89
Capital One Financial Corporation (NYSE:COF) uses its online and mobile channels to attract new clients and manage existing ones while maintaining a smaller branch network than its traditional banking counterparts. The company has been able to expand its national reach beyond what its limited branch network would normally permit because of its focus on online bank accounts. This arrangement enables the firm to profit from the size of a major bank without having to pay for the upkeep of a large bank’s branch network.
The Delaware State Bank Commissioner gave Capital One Financial Corporation (NYSE:COF) permission to finalize its acquisition of Discover Financial Services and its subsidiary, Discover Bank, on December 19. In February 2024, a final deal was reached between the two businesses to acquire Discover for $35.3 billion. It is anticipated that the deal will be finalized in early 2025.
The move has bolstered investor confidence in Capital One Financial Corporation (NYSE:COF). Amalthea Fund stated the following regarding the acquisition in its Q3 2024 investor letter:
“US Credit cards have become a concentrated business. The leading players in order are Chase, a part of JPMorgan, American Express, Citi, Capital One, Bank of America, and Discover. A combination of Capital One and Discover will become the number two player.”
Following Bank of America’s upgrade of the shares from Neutral to Buy, Capital One Financial Corporation (NYSE:COF) shares rose by 3%. The bank raised the firm’s price target from $207 to $235. BofA anticipates greater synergies compared to expectations from the company’s impending acquisition of Discover Financial Services.
Bullish optimism is further fueled by Capital One Financial Corporation’s (NYSE:COF) strong financial performance. The business reported $10.2 billion in net revenue for the fourth quarter of 2024. Compared to the same period of the previous year, when net income was $706 million, or $1.67 per diluted common share, it rose to $1.1 billion, or $2.67 per diluted common share, for the quarter. The stock rose by more than 10%, making it among the Best Warren Buffett Stocks.
