5 Most Undervalued Dow Stocks To Buy According To Hedge Funds

1. JPMorgan Chase & Co. (NYSE:JPM)

Number of Hedge Fund Holders: 110

JPMorgan Chase & Co. (NYSE:JPM) is one of the biggest banks in the world. JPMorgan Chase & Co. (NYSE:JPM) is a hedge fund favorite, as Insider Monkey’s database of 920 hedge funds shows that 110 hedge funds had stakes in the company as of the end of the third quarter of 2022. The total value of these stakes was $6.4 billion. The biggest stakeholder of the bank during this period was Ken Fisher’s Fisher Asset Management which owns an $821 million stake in JPMorgan Chase & Co. (NYSE:JPM).

JPMorgan Chase & Co. (NYSE:JPM)’s Q4 results were better than expected, though the stock fell after the company said it plans to spend more in 2023 than it did in 2022. For fiscal 2023, total net interest income is expected to come in at about $73 billion.

Here is what Vltava Fund has to say about JPMorgan Chase & Co. (NYSE:JPM) in its Q3 2022 investor letter:

“We regard JPM to be the strongest and best- managed bank in the world. It is a leader in investment banking, commercial banking, credit cards, and asset management. Its size (the largest bank in the USA, with nearly USD 4,000 billion in assets) and diversification give it a strong competitive advantage that is compounded by its cost advantages and the high costs to clients associated with switching banks. JPM’s management prides itself on running the only large bank to avoid major instability over the long term.

JP Morgan’s quality and strength first became fully evident in 2008 under the leadership of its CEO Jamie Dimon. Not only did JP Morgan help to stabilize the market by taking over the failing Bear Stearns in the spring of that year, but throughout the Great Financial Crisis it was the only big US bank that did not require government assistance and it was highly profitable even in the difficult year of 2008.

A well-functioning and efficient bank can be a very good long-term investment, because the interest compounding effect works well here. JPM’s return on equity (ROE) is well into the double digits and this puts it in a good position to continue producing better long-term returns than does the market. JPM has been very profitable even during years when interest rates were close to zero. The current – and perhaps not temporary – return to somewhat more normal, higher interest rates should have a significantly positive impact on the bank’s interest income and overall profitability.”

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