5 Best Financial Services Stocks to Buy Now

2. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Holders: 88

According to Bloomberg, Wells Fargo & Company (NYSE:WFC) remains the best performing bank in 2021, surging 62.1%, as of the close of December 2. Due to its strong performance, Odeon Capital upgraded the stock to Buy, highlighting its reasonable valuation.

In its Q3 earnings, Wells Fargo & Company (NYSE:WFC) posted a GAAP EPS of $1.17, which beats the analysts’ estimates by $0.17. Moreover, the California-based financial services company reported revenue of $18.8 billion, exceeding expectations by $520 million.

At the end of Q3 2021, 88 hedge funds tracked by Insider Monkey reported owning stakes in Wells Fargo & Company (NYSE:WFC), compared with 94 in the previous quarter. These positions held a consolidated value of over $6.1 billion. Eagle Capital Management was the company’s leading shareholder in Q3, worth over $1.5 billion.

L1 Capital mentioned Wells Fargo & Company (NYSE:WFC) in its Q2 2021 investor letter. Here is what the firm has to say:

“Wells Fargo (Long +16%) was the strongest contributor to portfolio performance over the quarter. Wells Fargo shares rallied given a better outlook for bad debts driven by improving employment and house price trends. The company had been very undervalued due to excessive fears around likely bad debts due to the pandemic, the continued regulatory “asset cap” (a punishment that was put in place in 2017 for numerous compliance failures) and an inability to commence buybacks. The share price has subsequently recovered strongly in recent months as the company has progressed its turnaround program under the leadership of the well-regarded CEO, Charles Scharf (former CEO of Visa and BNY Mellon). Wells Fargo is now closer to getting the asset cap lifted and has announced a huge cost out program (US$8b+) as well as an $18b buyback program to be completed over the next 12 months. Wells Fargo shares have rallied more than 50% since we initiated the position in late 2020. Given the strong rally, we elected to exit our position and rotate into stocks with larger valuation upside.”