The finance industry plays a crucial role in the business hemisphere by providing financial services to commercial and retail clients. The finance industry, especially banking, is in a transformative stage after the financial crisis of 2008/2009, with its primary focus on profitability. The introduction of internet wallets is likely to affect the retail banking industry as it imposes a challenge to innovate new consumer-friendly banking options. At Insider Monkey, we track more than 700 hedge funds and analyze their stock holdings in different sectors. It allows us to identify the most popular stock choices in every industry and this information is crucial for professional and retail investors alike. As per our analysis of the recent 13F filings, Citigroup Inc (NYSE:C), American International Group Inc (NYSE:AIG), Bank of America Corp (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), and Citizens Financial Group Inc (NYSE:CFG) are the top five finance sector stock choices of the investment firms we track in our database.
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Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 144% over the last 32 months, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
Citigroup Inc (NYSE:C) is the most popular stock choice of investment managers for the filing period of March 31. 126 funds tracked by Insider Monkey hold positions in Citigroup Inc with an aggregate investment of $11.63 billion. The provider of financial products and services has lost popularity among hedge fund managers during the first quarter of 2015, although net investments have risen 3.19% during the quarter. The net investments in Citigroup Inc (NYSE:C) during the fourth quarter of 2014 were $11.27 billion from 137 funds holding positions in the company.
Citigroup Inc (NYSE:C) is planning to sell its consumer banking units in Panama and Costa Rica, with Canada’s Bank of Nova Scotia (NYSE:BNS) being the primary bidder for these units. The deal is likely to total around $1.1 billion and Bank of Nova Scotia is conducting the necessary diligence for the transaction. In light of its recent deals and talks with different banks, Citigroup Inc (NYSE:C) appears to be streamlining its businesses. It was in talks with Banco Popular Espanol SA, a Spanish banking company, for the sale of its Central American retail business units earlier this year but a deal could not be reached. Jean-Marie Eveillard‘s First Eagle Capital Management holds a large stake in Citigroup Inc that includes 26.35 million shares valued at $1.36 billion.
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American International Group Inc (NYSE:AIG) comes in at number two in the list of most popular finance stocks for the filing period of March 31. Out of 730 hedge funds tracked by Insider Monkey, 101 hold positions in the American insurance company, with net investments totaling $10.65 billion. These figures are lower in comparison to the previous filing period when 116 hedge funds had invested in the insurance company with an aggregate investment amount of $11.65 billion. In a recent announcement made by American International Group Inc (NYSE:AIG), the company has acquired a controlling stake in ING Employee Benefits Global Network for an undisclosed amount. AIG has renamed the employee benefits network, which is involved in providing administrative and marketing services to insurance companies that cover multinational employers, to AIG Global Benefits Network. The insurance company has attracted investments from firms such as Paulson & Co and Richard Perry‘s Perry Capital.
Bank of America Corp (NYSE:BAC) is another popular finance stock in the equity portfolio of investment managers. According to our data, 101 hedge funds have made investments in the bank with aggregate investments of $5.62 billion. While fund ownership increased from 94 at the end of 2014, aggregate investments were lower, down from $6.78 billion. According to a news report by The Wall Street Journal, Bank of America Corp (NYSE:BAC) is ready to upgrade its private-placements arm with a new team. This new wing would be called Strategic & Private Capital Solutions Group and it would be responsible for raising money for private companies. Sachin Aggarwal and Warren Fixmer will head the group, which will function as a sub-division of the Americas equity capital markets unit of the bank. This division will focus on pre-IPO deals, private placements, and special-purpose acquisition companies. Ken Fisher‘s Fisher Asset Management, and Pzena Investment Management have large stock positions in Bank of America.
With 95 investors holding stock positions valued at $7.64 billion, JPMorgan Chase & Co. (NYSE:JPM) is the fourth-most popular finance company among the hedge funds covered by Insider Monkey. There was a lot of interest in the financial holding company as it witnessed an increase in the number of investors as well as their net investment. During the previous reporting period, 92 investment managers held positions in JPMorgan Chase & Co. (NYSE:JPM) with an aggregate of $7.06 billion invested. In terms of market capitalization, JPMorgan Chase & Co. (NYSE:JPM) is the tenth-largest firm in the S&P 500. Earlier last week, the financial institution launched JPMorgan Chase Institute, with the CEO of JPMorgan, Jamie Dimon, saying that the institute would “educate the world.” The institute would offer real-time data analytics for policymakers, public, and other businesses. Some of the major stockholders of JPMorgan include Paul Ruddock and Steve Heinz‘s Lansdowne Partners as well as Fisher Asset Management.
Citizens Financial Group Inc (NYSE:CFG) comes in at number five on the list, with 76 hedge funds holding investments in the company. The retail bank holding company witnessed a tremendous change in its popularity as compared to the previous reporting period. The number of hedge funds investing in the company rose from just 30, while their net aggregate investments rose to $2.33 billion from $1.17 billion. Shares of Citizens Financial Group Inc (NYSE:CFG) have improved 6.87% year-to-date and currently trade at $26.92. David Einhorn‘s Greenlight Capital along with Citadel Investment Group are among the primary shareholders of the financial institution.
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