We recently compiled a list of the 10 best performing Warren Buffett stocks in 2024. In this article, we are going to take a look at where Jefferies Financial Group Inc. (NYSE:JEF) stands against the other Top-Performing Warren Buffett Stock of 2024.
Warren Buffett has etched his name as the most successful investor on Wall Street by steering a small company into a trillion-dollar empire. The milestone stems from the billionaire investor’s value investing strategy that has always focused on undervalued stocks with tremendous upside potential.
In a year where the overall market has been on an upward trajectory thanks to solid financial results amid a resilient economy and expectations of interest rate cuts, Buffett has outperformed the overall market. His investment firm gaining more than 28% compared to a 17% gain for the S&P 500 over the same period underscores Buffett’s competitive edge in picking and investing in market-beating stocks.
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Buffett, who rose to prominence in the 1960s, has transformed his investment firm into a conglomerate with stakes in companies in the insurance, railroad, retail, manufacturing, and energy sectors. According to Andrew Kligerman, TD Cowen’s Berkshire analyst, Buffett’s performance in 2024 is a testament to his stock-picking skills focused on businesses trading at relatively lower valuations.
Nevertheless, the billionaire investor has been in defensive mode despite the stellar performance for the better part of 2024. Concerned by valuations getting out of hand amid the high interest rate environment and deteriorating economic conditions, Buffett has dumped massive amounts of stocks in companies whose valuations got out of hand.
With the massive sale of stakes, the billionaire has successfully generated significant value as most of the stocks had gained significantly amid the bull run in the market. The stock sale has also allowed the billionaire investor to raise the cash pile in his investment firm to a record $277 billion.
Although Buffett has previously argued against diversification, it’s understandable why his firm decided to reduce stakes in some of the companies. The investments had been a huge success for his firm, locking profits with the overall market at all-time highs.
The fact that Buffett invests through a conglomerate structure, often considered archaic, underscores his edge in the highly competitive investment world. At 94, the ‘Oracle of Omaha’ has started showing signs of slowing down. The appointment of Greg Abel as his successor signals he may not have a significant say in investment decisions in the near future.
What might come as a surprise is that the best-performing Warren Buffett stocks in 2024 are not among the big names that account for the biggest share of Buffett’s portfolio. Instead, they are companies that have remained resilient amid the high interest rate environment that has rattled the stock market.
Additionally, they boast of stocks well positioned to benefit as the macroeconomic environment improves, with the US Federal Reserve cutting interest rates by 50 basis points. The US economy is avoiding recession as the Fed continues to tweak its monetary policy, which should allow the companies to generate more shareholder value and, therefore, continue powering high.
Buffett’s investment portfolio also includes companies with tremendous potential and ability to generate free cash flow owing to resilient core businesses. Consequently, the companies have emerged as a source of passive income, allowing Buffett to generate billions of dollars in dividends. Last year alone, the Oracle of Omaha raked $4.36 billion in dividends from his investments.
Our Methodology
We analyzed Berkshire Hathaway’s Q2 2024 portfolio and picked the best-performing stocks on a year-to-date basis, as of September 20. The list is sorted in ascending order of the year-to-date performance of the stocks.
At Insider Monkey, we are obsessed with 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).
Jefferies Financial Group Inc. (NYSE:JEF)
Warren Buffett’s Q2 2024 Stake: $21.57 Million
Year to Date Gain as of September 20: 54.11%
Number of Hedge Fund Investors In Q2 2024: 39
Jefferies Financial Group Inc. (NYSE:JEF) is a financial services company that operates as an investment banking and capital markets firm. The company provides banking advisory services and has been one of the best-performing Warren Buffett stocks in 2024 amid the high interest rates environment.
Jefferies Financial Group Inc. (NYSE:JEF) has been powering high in 2024, supported by solid fundamentals such as high interest rates that board well with financial services core business. The rally to 52-week highs underscores a period of significant growth for the diversified financial services company, which has seen its stock value surge by an impressive 70.86% over the past year.
Investors have been buying the stock buoyed by the company’s strategic initiatives and strong financial performance. The firm’s profits rose in the second quarter, as the revenue from investment banking soared by 59% to $1.66 billion and the underwriting of debt more than doubled, contributing to indications of improving outlooks for the largest US banks.
For the fiscal second quarter, investment banking revenue was up 59%. The total earnings were $145.7 million, or 64 cents per share, a significant rise from $12.4 million, or 5 cents per share, in the previous year. These figures indicate a rebound in the demand for investment banking services following geopolitical worries and persistently high interest rates, which previously slowed down the pace of deal-making.
Amid the solid financial results, Jefferies Financial Group Inc. (NYSE:JEF) confirmed a 35% increase in dividend payout to 35 cents a share, affirming why it is one of Warren Buffett’s top stocks.
During June 2024, 39 out of the 912 hedge funds polled by Insider Monkey had bought and owned Jefferies Financial Group Inc. (NYSE:JEF)’s shares. Out of these, the biggest investor was Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, as it owned 5.4 million shares that are worth $269.21 million.
Overall JEF ranks 2nd on our list of 10 best performing Warren Buffett stocks in 2024. While we acknowledge the potential of JEF as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than JEF, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
