3. Bank of America Corporation (NYSE:BAC)
Forward P/E Ratio: 12.29
Earnings Growth This Year: 6.20%
Number of Hedge Fund Holders: 92
Bank of America Corporation (NYSE:BAC) is a financial holding company based in the United States of America. It stands as the second-largest bank in the United States by assets. The financial holding company provides a range of services including deposits, savings accounts, cash management, and other banking-related services.
BAC is a popular stock among hedge funds. It was held by 92 hedge funds in Q2 2024, with total stakes worth more than 48.1 billion. Warren Buffet has long been a fan of banking stocks, especially Bank of America Corporation (NYSE:BAC). Buffett’s firm, Berkshire Hathaway is still the top shareholder of the company with a position worth $41.1 billion. However, there has been some movement about Buffett selling his stakes in the bank.
As per the most recent filing of Berkshire Hathaway, the company sold 5.8 million shares in Bank of America Corporation (NYSE:BAC) without any formal reason or comment. Investors of the bank have been watching this move closely and are confused if it is a sign of weakening business for the bank.
While the reason behind Buffett selling his stakes is still unknown, what’s evident is that the business of Bank of America Corporation (NYSE:BAC) is not at all weak. During the second quarter of 2024, the bank added around 278,000 new checking accounts. Moreover, the wealth management division announced 6,100 new relationships indicating that the number of small and medium business accounts is growing.
Talking about revenue, the growth was mainly flat with revenue growing only 1% from the comparable quarter last year, and the net income was down 3% to $13.7 billion during the quarter. However, on the bright side, the loan portfolio of the bank grew by 2% during the quarter $1.91 billion, indicating a growing balance sheet.
Lastly, the growing economy is also anticipated to be a positive point for the bank as it will trigger more credit card spending, loans, and business borrowing. Therefore, regardless of Warren Buffett selling a chunk of his shares in the company, the financials remain strong. Bank of America Corporation (NYSE:BAC) is one of the cheap beginner stocks to invest in with a forward P/E of 13% and earnings expected to grow by 6.2% during the year.
ClearBridge Value Equity Strategy stated the following regarding Bank of America Corporation (NYSE:BAC) in its first quarter 2024 investor letter:
“We added several new positions during the quarter. Our largest new addition was Bank of America Corporation (NYSE:BAC), one of the world’s leading financial institutions, serving some 66 million consumer and small business clients across the U.S. as well as large corporations, financial institutions and governments globally. We believe that the interest rate pressure that Bank of America faced in early 2023 has subsided, and risks surrounding deposit outflows have abated, which should allow the company to improve its book value and capital growth as well as benefit from a rebound of capital markets activity.”
