2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 84
Banking stocks are cyclical in nature and tend to soar with interest rate spikes and surging inflation. Bank of America Corporation (NYSE:BAC) provides banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide. This March, Baird analyst David George upgraded Bank of America Corporation (NYSE:BAC) to Neutral from Underperform and reiterated his price target of $42 on the shares.
By the end of the fourth quarter of 2021, 84 hedge funds held stakes in Bank of America Corporation (NYSE:BAC) which were worth more than $47.87 billion. This is compared to 72 identified positions in the preceding quarter, with stakes worth $46.46 billion. Based on these numbers, we can conclude that the hedge fund sentiment for the stock is positive.
On January 29, Bank of America Corporation (NYSE:BAC) announced that its earnings per share for the fiscal fourth quarter of 2021 were $0.82, and it outperformed market consensus by $0.06. The company reported quarterly revenues of $22.06 billion, up 9.14% year over year from $20.21 billion. As of March 31, 2022, Bank of America Corporation (NYSE:BAC) has gained 4.38% over the past twelve months.
As of the end of last December, Berkshire Hathaway is the most prominent shareholder in Bank of America Corporation (NYSE:BAC). According to Insider Monkey’s data, the Warren Buffett-led hedge fund’s stakes in the company were valued at a whopping $44.93 billion, which accounts for 13.57% of Berkshire Hathaway’s 13F portfolio.
Here is Oakmark Funds’ stance on the Bank of America Corporation (NYSE:BAC) in the firm’s third-quarter 2021 investor letter:
“Earlier this year, one of our holdings, Bank of America Corporation (NYSE:BAC), announced that it was raising its minimum hourly wage from $15 to $20 and would increase it to $25 by 2025. The company received great press for placing the well-being of its employees above profits. But was it really either/or? Bank of America’s chief human resources officer spoke to the bigger picture: “A core tenet of responsible growth is our commitment to being a great place to work…that includes providing strong pay and competitive benefits to help them and their families, so that we continue to attract and retain the best talent.” Bank of America understood that engaged, high-caliber employees are more productive, less prone to turnover and, therefore, less expensive in the long run. Increasing the pay for employees wasn’t elevating employees above shareholders; it was the right thing to do for employees and for shareholders.
If an increase to $20 was good, why stop there? Why not $50 per hour? Because the benefits the business receives at $50 don’t justify the expense. The bank would no longer be able to price its products competitively and would lose business. The employees would “win” in the short term, but eventually the lost business would lead to job cuts, meaning both employees and shareholders would lose. The negative effects of stakeholder overreach are no different than when CEOs overreach to inflate short-term profits. Both hurt shareholders and stakeholders.”
