Hedge and Mutual Fund Managers Love These Red-Hot Financials

To say that Wall Street portfolio managers tend to talk amongst themselves is probably an understatement, as those in the industry tend to mingle professionally and socially. However, since hedge funds and mutual funds often have far different strategies and time horizons, they often have widely different portfolio holdings. So, we found it interesting when Goldman Sachs screened various top hedge funds and mutual funds looking for holdings they both had.

The Goldman Sachs team found that there are 11 “shared favorites” of the top mutual funds and hedge funds that are performing well this year. We screened the list looking for stocks that also pay dividends and are rated Buy at Goldman Sachs. The current market environment is volatile, and dividend-paying leaders make sense in a low interest rate environment. While rates have moved somewhat higher, they remain near generational lows.

It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Bank of America

The company posted solid first-quarter results and the stock is on the Goldman Sachs Conviction List of top ideas. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, corporations and governments in the United States and internationally. It operates 5,100 banking centers, 16,300 ATMs, call centers and online and mobile banking platforms.

The bank has expanded into a number of new U.S. markets, with scale across the country positioning it ideally to benefit from accelerating loan growth over the next two years. Moreover, unlike smaller peers, scale allows the bank to increase investment substantially over the next few years without notably jeopardizing returns, driving further market share gains.

Investors receive a 1.70% dividend. Goldman Sachs has a $45 price target on Bank of America stock. The $42.95 Wall Street consensus target price is closer to Monday’s closing print of $42.63 a share.

Citigroup

This top bank stock has rallied nicely but looks poised to move even higher for the rest of 2021. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations, governments a broad range of financial products and services.

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