Goldman Sachs’ Top Fund Manager Stock Picks: 25 Best Overweight Stocks

2. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Investors In Q2 2024: 83

Mutual Fund Overweight Percentage: 0.18%

Wells Fargo & Company (NYSE:WFC) is one of the biggest banks in America. It is a diversified bank that operates in investment banking, wealth management, commercial banking, and other markets. The bank has a considerable presence in the domestic US market, and as of Q2 2024, $11.9 billion out of its $20.7 billion in revenue came from net interest income. Additionally, consumer banking is Wells Fargo & Company (NYSE:WFC)’s biggest interest income contributor, since during the quarter, $7 billion of the bank’s $11.9 billion net interest income came through consumer banking and lending. This division also had the highest non interest expenses, and moving forward, as interest rates drop, Wells Fargo & Company (NYSE:WFC) should find more breathing room on its income statement as its interest costs drop. Additionally, lower rates also mean increased investment banking activity provided the economy is robust, and given Wells Fargo & Company (NYSE:WFC)’s diversified business, the bank can see catalysts from this area as well. The shares gained 3.7% in the week of the Fed’s interest rate cuts, but headwinds can result from stricter regulation such as the recent anti money laundering announcement.

Wells Fargo & Company (NYSE:WFC)’s management commented on its investment arm during the Q2 2024 earnings call:

“We have been methodically growing our corporate investment bank, which has been a priority and continues to be a significant opportunity for us. We are executing on a multi-year investment plan while maintaining our strong risk discipline and our positive momentum continues. We have added significant talent over the past several years and we’ll continue to do so in targeted areas where we see opportunities for growth. Fernando Rivas recently joined Wells Fargo as Co-CEO of Corporate Investment Banking. Fernando has deep knowledge of our industry and his background and skills complement the terrific team Jon Weiss has put together. While we view our work here as a long-term commitment, we expect to see results in the short and medium term and are encouraged by the improved performance we’ve already seen with strong growth in investment banking fees during the first half of the year.

In our Wealth and Investment Management business, we have substantially improved advisor retention and have increased the focus on serving independent advisers and our consumer banking clients, which should ultimately help drive growth. In the commercial Bank, we are focused on growing our treasury management business, adding bankers to cover segments where we are underpenetrated, and delivering our investment banking and markets capabilities to clients and believe we have significant opportunities in the years ahead.”