7 Best American Bank Stocks To Buy According to Hedge Funds

4. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Investors: 83

Currently ranked as the fourth-largest bank in the United States, Wells Fargo was established in 1852. It operates in 35 countries around the globe and provides a wide range of financial services and products. The US-based financial firm offers personalized help from financial advisors along with an abundance of resources for financial education.

Wells Fargo & Company (NYSE:WFC) beat consensus projections for both the top and bottom lines in its second-quarter 2024 earnings. However, the company’s net interest income, a crucial metric for banks, underperformed, and it has been declining every quarter since Q4 2022. The bank’s net interest income, which is calculated as the difference between interest revenue received from loans and interest expenses, decreased by 9% year over year and is currently expected to shrink by 8-9% this year.

Under Scharf, one of the “Best Financial Services Stocks To Buy Now” has bolstered its trading and investment banking capabilities by bringing on board a few senior executives from rival companies. Wells Fargo’s investment banking income climbed by 38% to $430 million YoY in the second quarter of 2024.

Despite its growth, the company remains limited by a $1.95 trillion asset cap and ongoing regulatory scrutiny.

As part of the investor “bull thesis” going into the quarter, analysts projected better net interest income; hence, management’s revised view for NII is expected to put pressure on the stock, according to Citigroup analyst Keith Horowitz in a note.

Wells Fargo & Company (NYSE:WFC) plans to maintain its multi-year restructuring plan, putting an asset cap in place until 2024 and concentrating on cost-cutting measures to boost its efficiency ratio. The bank is also reconstructing its card business, middle-market investment banking, and wealth section.

Natixis Global Asset Management’s Harris Associates is the largest shareholder in the company, with 21,386,721 shares worth $1.27 billion.