We recently published a list of Billionaire Louis Bacon’s Top 10 Long-Term Stock Picks. In this article, we are going to take a look at where Capital One Financial Corporation (NYSE:COF) stands against other Billionaire Louis Bacon’s long-term stock picks.
Louis Bacon is one of the most prominent and successful hedge fund managers of his generation, known for his astute macroeconomic insights and ability to navigate volatile markets. As the founder of Moore Capital Management, Bacon built a reputation for delivering exceptional returns while maintaining a disciplined approach to risk management. Louis Moore Bacon was born in 1956 into a family with roots in business and the outdoors. His father, Louis Turner Bacon, was a businessman and chairman of the Reynolds Securities brokerage firm. These early influences shaped Bacon’s interest in finance and conservation. Bacon attended Middlebury College, where he earned a degree in American Literature, and later pursued an MBA at Columbia Business School, graduating in 1981. His education laid the groundwork for his successful career in trading and investment management.
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Bacon started his financial career on the trading desk of Bankers Trust. Later, he joined Shearson Lehman Brothers, where he developed expertise in trading currencies, commodities, and futures. His early experiences as a trader honed his ability to identify macroeconomic trends, a skill that would define his investment strategy. In 1987, Bacon used a $25,000 inheritance to establish his own trading account. His success during the stock market crash of October 1987, when he profited by shorting the market, demonstrated his ability to capitalize on turbulent conditions. In 1989, Louis Bacon founded Moore Capital Management with $25,000 of his own money and $1.6 million in seed capital. The hedge fund focused on global macroeconomic investing, a strategy that involves analyzing and trading based on macroeconomic trends such as interest rates, currencies, and commodities.
Bacon’s success was rapid and significant. In its first year, Moore Capital posted a return of 86%, showcasing Bacon’s skill in navigating volatile markets. Over the decades, Moore Capital became one of the most successful hedge funds in the industry, managing more than $14 billion at its peak. Over three decades, Moore Capital delivered annualized returns of approximately 17%, outperforming most hedge funds. Bacon’s ability to generate profits during financial downturns, such as the 2008 global financial crisis, solidified his reputation as a skilled macro trader. At the end of the third quarter of 2024, the 13F portfolio of the fund was worth more than $5.4 billion with the top holdings in the technology and financial sectors.
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For this article, we selected stocks by combing through the 13F portfolio of Moore Global Investments at the end of the third quarter of 2024. Only the companies that have been in the 13F portfolio of the fund consistently for the past three years were selected. These stocks are also popular among other hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A smiling face of a customer as they make a deposit at this company’s branch.
Capital One Financial Corporation (NYSE:COF)
Number of Hedge Fund Holders: 67
Moore Global Investments’ Stake: $27.2 million
Capital One Financial Corporation (NYSE:COF) is a bank holding company specializing in credit cards, auto loans, banking, and savings accounts. There are several key elements that position this company as an appealing choice for investors. Firstly, promising financial growth is depicted in the report for the third quarter of 2024. For instance, as illustrated in the report, net income was $1.8 billion, or $4.41 per diluted common share, compared with net income of $597 million, or $1.38 per diluted common share in the second quarter of 2024, and with net income of $1.8 billion, or $4.45 per diluted common share in the third quarter of 2023. Secondly, Capital One Financial Corporation and Discover Financial Services have entered into a definitive agreement under which Capital One will acquire Discover in an all-stock transaction valued at $35.3 billion. Moreover, the company plans a community benefit scheme that commits more than $265 billion in lending, investment, and philanthropy over five years as part of its proposed acquisition of Discover Financial Services.
Overall, COF ranks 5th on our list of Billionaire Louis Bacon’s long-term stock picks. While we acknowledge the potential of COF as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than COF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.