In this article we take a look at the top 5 positions of Charlie Munger as of the end of the second quarter. To skip this part and read Charlie Munger’s history and his other favorite stocks, go to Charlie Munger Stock Portfolio: 5 Biggest Positions.
2. Wells Fargo & Company (NYSE:WFC)
American financial services giant Wells Fargo remained one of the top picks of Charlie Munger as the second quarter of this year came to an end. Munger’s Daily Journal had a $64 million stake in the company. The stock rallied after posting strong third quarter results as the company’s numbers were helped by rising interest rates and net interest income. In October, Goldman Sachs analyst Richard Ramsden upgraded Wells Fargo stock to Buy from Neutral, citing revenue upside, efficiency improvement from rates, loan-growth-fueled net interest income, and expense reductions. The analyst said that in case of a recession, Wells Fargo has less risk as compared to its peers.
However, hedge fund sentiment for Wells Fargo saw a dip in the second quarter. 83 hedge funds out of the 895 tracked by Insider Monkey reported having stakes in the bank at the end of June. In the previous quarter, 93 funds in our database were long the stock.
Here is what Oakmark Funds specifically said about Wells Fargo & Company (NYSE:WFC) in its Q3 2022 investor letter:
“Wells Fargo & Company (NYSE:WFC) has been a long-time holding in the Oakmark Fund. Despite the positives of higher interest rates and the company making good progress on reducing expenses and regulatory consent orders, Wells Fargo shares have fallen one-third from their highs earlier this year to roughly 6.5x our estimate of normalized earnings power, and the stock ended the quarter at ~1x next year’s tangible book value. We find this is far too cheap for a strong banking franchise capable of tangible returns in the low-to-mid teens across business cycles.”
1. Bank of America Corporation (NYSE:BAC)
Charlie Munger and Warren Buffett both love Bank of America, with the latter having a $31 billion stake in the bank and the former owning $69.5 million worth of shares of the company as the second quarter of this year came to an end. Bank of America is a strong dividend payer. The company recently declared a $0.22/share dividend. Bank of America recently crushed third quarter Wall Street estimates, thanks to the rising interest rates and global markets revenue. EPS in the quarter came in at $0.81, beating the estimate of $0.78.
Bank of America is one of the most popular stocks among the hedge funds we track. 99 funds in our database reported having stakes in Bank of America as the second quarter of this year came to an end.
Here is what Diamond Hill Capital Management specifically said about Bank of America Corporation (NYSE:BAC) in its Q2 2022 investor letter:
“Bank of America Corporation (NYSE:BAC) shares were weak in Q2 as the market became increasingly focused on the possibility of a near-term recession and the potential for credit losses along with current fee revenue pressures.”
You can also take a look at 10 Healthcare Dividend Stocks with Over 3% Yield and 10 Best Solar Energy Stocks to Buy for 2022.
