We recently published a list of 10 Best Financial Stocks to Buy According to Billionaires. In this article, we are going to take a look at where The Allstate Corporation (NYSE:ALL) stands against other best financial stocks to invest in.
Financial stocks had a great run in 2024, jumping over 30% by mid-December and outpacing the broader market. Fidelity noted that concerns about bank failures faded as the economy stayed strong, and improving fundamentals kept the sector on track. With the Fed cutting rates for the first time since the pandemic, lower borrowing costs could boost economic activity, even if they squeeze bank profit margins a bit. There are still risks, like commercial real estate exposure and loan defaults, but the post-election landscape looks favorable, with lighter regulations and more deal-making. Heading into 2025, financial stocks have solid momentum and plenty of tailwinds. This shift is creating fresh opportunities across the financial sector, from capital markets to private credit.
According to Morgan Stanley, capital markets are making a big comeback in 2025, strengthened by lower interest rates, easing inflation, and steady economic growth. After a period of uncertainty, companies and investors are finally feeling confident enough to jump back into mergers, acquisitions, and major spending. With more cash flowing into the market, demand for private credit and infrastructure investments, especially in AI, is on the rise. Private credit is also having a moment, offering companies more flexible financing options. It is growing fast, with assets under management expected to double in the next few years. Many businesses are using private markets to refinance debt and fuel expansion. 2025 is shaping up to be a huge year for strategic deals, leveraged buyouts, and capital raising.
Mergers and acquisitions in financial services are set to stay strong in 2025. After a year of big-money deals in 2024, companies are still looking for ways to grow, stay competitive, and adapt to market shifts. While economic uncertainty and geopolitical tensions remain, financial firms are using M&A to keep up with new technologies, changing customer expectations, and regulatory changes. Many banks and financial institutions are eyeing fintech acquisitions to stay ahead in the digital space while selling off underperforming parts of their business to free up capital for high-growth opportunities. Larger deals are becoming more common, especially as potential financial deregulation in the US could shake up global markets.
Some of the wealthiest billionaires have built some of the world’s largest financial firms or continue to hold major ownership positions in them. These companies specialize in asset management, financial data services, and cryptocurrency trading. Take Warren Buffett, for instance. Investors around the world look to his portfolio for guidance. His investment strategy heavily favors financial stocks, with significant holdings in banks, payment technology firms, and insurance companies. By the end of 2024, he had committed over $100 billion to the financial sector, representing a substantial share of his estimated $267 billion portfolio. Like Buffett, there are lots of billionaire portfolios to watch out for. So, let’s dive into the best financial stocks that Wall Street moguls are backing.
A financial advisor giving advice to a couple, illustrating the personal finance and insurance products the company offers.
Our Methodology
To collect data for this article, we scanned Insider Monkey’s database of billionaires’ stock holdings and picked the top 10 companies operating in the financial services industry with the highest number of billionaire investors in Q4 of 2024. The stocks are ranked in ascending order based on the number of billionaire investors.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
The Allstate Corporation (NYSE:ALL)
Number of Billionaire Investors: 19
The Allstate Corporation (NYSE:ALL) is an Illinois-based provider of auto, home, and commercial insurance across the United States and Canada, selling through agents, call centers, and online. It also offers roadside assistance, identity protection, and insurance for health, life, and disability. It is one of the best financial stocks to buy, given it holds the interest of 19 billionaire investors and 71 hedge funds in total as of Q4 2024.
On January 30, The Allstate Corporation (NYSE:ALL) disclosed that it is selling its Group Health business to Nationwide for $1.25 billion in cash, pending regulatory approval. In the first nine months of 2024, the business brought in $608 million in revenue and $69 million in profit. The sale is part of Allstate’s plan to focus on its core strengths, following a separate $2 billion deal to sell its Employer Voluntary Benefits division. The company is still deciding whether to keep or sell its Individual Health business. The sale will boost capital by $0.9 billion and result in a $450 million gain. The deal is expected to close in 2025.
The Allstate Corporation (NYSE:ALL) raised its quarterly dividend by 8.7% to $1.00 per share on February 26. The dividend is payable on April 1, 2025, to shareholders on record as of March 10. The company also approved a $1.5 billion share buyback program running through September 2026.
On February 5, The Allstate Corporation (NYSE:ALL) announced that its Q4 revenue rose 11% to $16.5 billion, and its net income grew 30% to $1.9 billion. Strong performance in auto, homeowners insurance, and protection services drove an adjusted net income of $4.9 billion for the year. Investment income rose 25% to $3.1 billion in 2024, while homeowners insurance earned $1.3 billion despite $3.7 billion in catastrophe losses. Allstate minimized wildfire losses through reinsurance and reduced market exposure. The company expanded Property-Liability, grew Protection Plans revenue to nearly $2 billion for the year, and increased policies by 60% since 2019. It sold two Health and Benefits businesses for $3.25 billion and expects auto insurance growth in 2025.
Overall, ALL ranks 7th on our list of the best financial stocks to buy according to billionaires. While we acknowledge the potential of ALL to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ALL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
