Battered by Brexit: How Hedge Funds’ Favorite Finance Stocks Performed in Q2

#3. JPMorgan Chase & Co. (NYSE:JPM)

 – Hedge Funds with Long Positions (as of March 31): 97

 – Aggregate Value of Hedge Funds’ Holdings (as of March 31): $6.93 Billion

Moving on, JPMorgan Chase & Co. (NYSE:JPM)’s stock has suffered the smallest year-to-date decline among the stocks covered in this list, being down by 3%, which can be partially attributed to the 5% gain the stock registered during the second quarter. The investment bank generates a large amount of its income in the U.K. and is currently considering moving thousands of its employees out of the country if the U.K. loses its ‘Passport rule’ (the right to buy and sell securities in the EU) due to the Brexit outcome. JPMorgan Chase & Co. (NYSE:JPM) reported its second quarter results on the same day as Wells Fargo, announcing EPS of $1.55 on revenue of $25.2 billion for the quarter, topping the consensus estimates of EPS of $1.44 on revenue of $24.14 billion. Funds that increased their holdings in the company during the first quarter included Boykin Curry‘s Eagle Capital Management, which upped its stake by 6% to 13.28 million shares.

#2. Citigroup Inc (NYSE:C)

 – Hedge Funds with Long Positions (as of March 31): 104

 – Aggregate Value of Hedge Funds’ Holdings (as of March 31): $8.03 Billion

Amid an almost 20% drop in Citigroup Inc (NYSE:C)’s stock during the first quarter, the number of hedge funds in our system with long positions in the stock declined by two and the aggregate value of their holdings in it fell by $1.94 billion. Though shares of Citigroup Inc (NYSE:C) managed to end the second quarter with a meager gain of 1.53%, it is still trading down by over 14% year-to-date. According to several analysts, the stock is a good bargain at current levels as it is currently trading at a trailing P/E of 9.33, which is considerably lower than its 5-year historical average trailing P/E of 14.32. On July 7, Reuters reported that the company is merging its consumer banking unit in Europe, Middle East and Africa (EMEA) with its consumer banking unit in Asia. Over the last few years, Citigroup has shut down its consumer banking operations in several countries, limiting its operations to 19 countries around the world. Seth Klarman‘s Baupost Group made no change to its stake of 102.55 million Citigroup shares during the first quarter.

#1. Bank of America Corp (NYSE:BAC)

 – Hedge Funds with Long Positions (as of March 31): 110

 – Aggregate Value of Hedge Funds’ Holdings (as of March 31): $5.52 Billion

Even though its ownership among the hedge funds in our system dropped by three and the aggregate value of their holdings in it fell by 18.8% during the first quarter, Bank of America Corp (NYSE:BAC) continued to remain the most popular financial stock among them as of March 31. Shares of the bank holding company ended the second quarter down by 1.85% and have lost almost 15% of their value so far in 2016. On July 7, analysts at Raymond Jones released a note in which they downgraded Bank of America Corp (NYSE:BAC) to ‘Market Perform’ from ‘Outperform’, citing concerns over the maturity of the credit cycle, the challenges faced by the bank’s investment banking unit, as well as the new accounting rule FAS 91, which will negatively impact Bank of America’s earnings going forward. The stock currently sports an average rating of ‘Overweight’ and an average price target of $17.31 from the 33 leading analysts and research firms on Wall Street who track it, with the average price target suggesting upside potential of 20%. Patrick Degorce‘s Theleme Partners was one of the hedge funds that initiated a stake in Bank of America Corp during the first quarter, purchasing 6.88 million shares of the company.

Disclosure: None