Norwegian Billionaire Halvorsen’s Top 10 Stock Picks

1. U.S. Bancorp (NYSE:USB)

Viking Global’s Q3 Stake: $1.53 billion

Number of Hedge Fund Holders: 46

Headquartered in Minneapolis, Minnesota, and incorporated in Delaware, U.S. Bancorp (NYSE:USB) is one of the leading American bank holding companies. It operates as the parent organization of U.S. Bank National Association and is recognized among the largest banking firms in the country.

Citi analyst Keith Horowitz recently upgraded U.S. Bancorp (NYSE:USB) stock from Neutral to Buy, raising the price target significantly from $49 to $65. The stock had underperformed its peers due to concerns over a potential decline in return on tangible common equity (ROTCE), stemming from heightened investment spending, disappointing payment trends, and lower-than-expected net interest margin (NIM). However, Horowitz highlighted that the bank is making progress, with its investment spending now positioning the company for positive operating leverage as expense growth decelerates.

In Q3 2024, U.S. Bancorp (NYSE:USB) delivered robust results, reporting a net income of $1.71 billion, a 12.5% increase year-over-year, while diluted earnings per share rose to $1.03, compared to $0.91 in the same quarter last year. This strong performance was primarily driven by a 2.8% rise in net interest income, which reached $4.17 billion, supported by higher interest rates on earning assets and disciplined liability management. Although the quarter included $119 million in securities losses, these were largely offset by lower tax expenses due to favorable tax settlements.

Additionally, the bank maintained solid credit quality, aligning with expectations, and reinforced its capital position with a Common Equity Tier 1 (CET1) capital ratio of 10.5%. U.S. Bancorp (NYSE:USB) remains focused on balancing capital growth through earnings accretion with capital distributions and has indicated plans to resume share buybacks in the near future.

While we acknowledge the potential of USB, our conviction lies in the belief that certain 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 USB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.