In this article, we discuss the 5 stocks that benefit from interest rate hikes. If you want to read about some more rate hike stocks, go directly to 10 Stocks That Benefit From Interest Rate Hikes.
5. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 67
American Express Company (NYSE:AXP) provides charge and credit payment card products, and travel-related services. In early August, the company announced that it would be launching American Express Global Pay. The new digital solution aims to enable businesses based in the United States to securely make domestic and international business-to-business payments. The firm will provide businesses with the ability to make payments through a mobile-platform in the solution that will reach more than 40 countries and be available across a range of currencies.
On July 26, Citi analyst Arren Cyganovich kept a Neutral rating on American Express Company (NYSE:AXP) and raised the price target to $159 from $148, noting that higher operating and marketing expenses mitigate some of the earnings potential of the firm.
Among the hedge funds being tracked by Insider Monkey, Omaha-based investment firm Berkshire Hathaway is a leading shareholder in American Express Company (NYSE:AXP), with 151.6 million shares worth more than $2.1 billion.
In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and American Express Company (NYSE:AXP) was one of them. Here is what the fund said:
“In financials, American Express Company (NYSE:AXP) has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”
4. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 82
Citigroup Inc. (NYSE:C) provides various financial products and services to consumers, corporations, governments, and institutions. On September 14, Mark Mason, the chief financial officer of the bank, said that the firm was planning to divest the Mexican consumer banking business it owned either through a sale or an initial public offering. The move is part of a larger plan by the firm, announced in mid-2021, to exit 13 markets as it seeks to focus on presence in Asia and EMEA on four wealth centers.
On September 12, Deutsche Bank analyst Matt O’Connor kept a Hold rating on Citigroup Inc. (NYSE:C) stock and lowered the price target to $52 from $55, underlining that banks had upside potential in the long-term if the US avoids a recession.
Among the hedge funds being tracked by Insider Monkey, Omaha-based investment firm Berkshire Hathaway is a leading shareholder in Citigroup Inc. (NYSE:C), with 55 million shares worth more than $2.5 billion.
In its Q1 2022 investor letter, Diamond Hill Capital, an asset management firm, highlighted a few stocks and Citigroup Inc. (NYSE:C) was one of them. Here is what the fund said:
“Shares of Citigroup Inc. (NYSE:C) declined in the quarter as investors became increasingly negative on capital markets activity. The company is also continuing to divest certain consumer banking geographies which may be dilutive to earnings in the near term.”
3. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 99
Bank of America Corporation (NYSE:BAC) provides banking and financial products and services. In mid-August, the bank announced that consumer checking account customers saw fees related to overdraft services in June and July decline by 90% compared with the same period a year earlier. The company has more than 35 million consumer checking accounts. The changes relate to the new overdraft policies of the bank as it comes under pressure from fintechs that offer lower-fee accounts and from regulators. Bank of America Corporation (NYSE:BAC) is one of the most prominent gainers amid interest rate hikes.
On September 12, Deutsche Bank analyst Matt O’Connor kept a Buy rating on Bank of America Corporation (NYSE:BAC) stock and lowered the price target to $45 from $51, noting that banks had seen some relief over the past few weeks from recession fears.
Among the hedge funds being tracked by Insider Monkey, Omaha-based investment firm Berkshire Hathaway is a leading shareholder in Bank of America Corporation (NYSE:BAC), with 1 billion shares worth more than $31 billion.
In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Bank of America Corporation (NYSE:BAC) was one of them. Here is what the fund said:
“In the second quarter we made a sizable add to our position in Bank of America (NYSE:BAC) as our bank holdings have significant leverage to rising interest rates. The Fed, unfortunately, was late to realize inflation’s magnitude, maintaining for far too long that inflationary pressures were merely transitory. This mistake caused inflation to accelerate, necessitating a larger intervention than if the Fed had moved sooner.”
2. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 104
JPMorgan Chase & Co. (NYSE:JPM) operates as a financial services company worldwide. On September 12, the firm announced that it agreed to acquire a payments startup called Renovit. The startup, based in California, will speed up the ability of the banking giant to roll out new offerings to merchants. The startup already has a presence in large markets like India and the United Kingdom, and has had a working relationship with the bank since 2021. The purchase will also help the bank with a cloud transition.
On September 12, Deutsche Bank analyst Matt O’Connor kept a Buy rating on JPMorgan Chase & Co. (NYSE:JPM) stock and lowered the price target to $155 from $174, noting that banks had underperformed this year largely driven by recession fears.
At the end of the second quarter of 2022, 104 hedge funds in the database of Insider Monkey held stakes worth $5.8 billion in JPMorgan Chase & Co. (NYSE:JPM), compared to 110 in the preceding quarter worth $5 billion.
In its Q1 2022 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and JPMorgan Chase & Co. (NYSE:JPM) was one of them. Here is what the fund said:
“More cyclical sectors, including technology and consumer discretionary, were among the weakest, likely due to rising interest rates and inflation. It was encouraging to see the quarter finish on a strong note with the S&P 500 only about 5% away from its all-time highs. Shares of JPMorgan Chase (NYSE:JPM) detracted from performance due to the company’s increased expense guidance, announced in January.”
1. Berkshire Hathaway Inc. (NYSE:BRK-B)
Number of Hedge Fund Holders: 109
Berkshire Hathaway Inc. (NYSE:BRK-B) engages in the insurance, freight rail transportation, and utility businesses. Regulatory filings show that the company has increased its stake in energy giant Occidental to more than 20% in the past few weeks. The stock has seen share price more than double this year and energy prices climb to record highs. The purchase has also fueled speculation that the company may be considering a bid for the energy giant that has a market cap of over $60 billion.
Berkshire Hathaway Inc. (NYSE:BRK-B) has benefited from the rise in interest rates because it has a large stake in the banking and insurance businesses. Rate hikes increase the earnings of these sectors overnight.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Bill and Melinda Gates Foundation Trust is a leading shareholder in Berkshire Hathaway Inc. (NYSE:BRK-B), with 34.7 million shares worth more than $9.5 billion.
In its Q1 2022 investor letter, Diamond Hill Capital , an asset management firm, highlighted a few stocks and Berkshire Hathaway Inc. (NYSE:BRK-B) was one of them. Here is what the fund said:
“Diversified holding company Berkshire Hathaway Inc. (NYSE:BRK-B) reported strong earnings during the quarter and benefited from continued share repurchases below intrinsic value. The company also announced significant deployments of excess cash during the quarter, including the acquisition of Alleghany and a large increase in its stake in Occidental Petroleum.”
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