5 Most Undervalued Financial Stocks To Buy According To Hedge Funds

2. Bank of America Corporation (NYSE:BAC)

Number of Hedge Fund Holders: 100

Bank of America Corporation (NYSE:BAC) ranks 2nd in our list of the most undervalued financial stocks to buy according to hedge funds. Recently, Bloomberg reported that Bank of America Corporation (NYSE:BAC) was mulling laying off 200 investment bankers globally amid an uncertain economic outlook and rising interest rates. The report said that the number of job cuts are still “being reviewed” and they can start in the coming weeks.

Earlier this month, KBW analyst David Konrad downgraded Bank of America Corporation (NYSE:BAC) to Underperform from Market Perform.

While Bank of America Corporation (NYSE:BAC) is facing short-term pressures on the back of rising interest rates, the stock could be a long-term winner for those who are looking for stability and dividends.

A total of 100 hedge funds in Insider Monkey’s database reported owning stakes in Bank of America Corporation (NYSE:BAC) at the end of the fourth quarter of 2022. The biggest stakeholder of the bank was Warren Buffett’s Berkshire Hathaway which had a whopping $33 billion stake in Bank of America Corporation (NYSE:BAC).

Ariel Investment made the following comment about Bank of America Corporation (NYSE:BAC) in its Q3 2022 investor letter:

“We initiated three new positions in the quarter. We added leading financial institution Bank of America Corporation (NYSE:BAC) which serves individual consumers, small and middle-market businesses, and large corporations with a full range of banking, investing, asset management, and other financial and risk management products and services. The current company was formed through various mergers including NationsBank, FleetBoston, US Trust, Countrywide Financial, and Merrill Lynch with the legacy commercial bank to form a national banking powerhouse and bulge bracket investment firm. As one of the ‘Big Four’ U.S. banks it enjoys scale driven cost advantages and economies of scale which provide meaningful competitive advantages and potential for strong returns in the largely commoditized banking industry. A survivor of the financial crisis, BAC has emerged with a solid capital base and stands to benefit from a rising interest rate environment.”