The news these days makes it seem like big financial firms are getting hurt by regulators, historic fines and layoffs, but hedge funds are pretty confident in their stocks. In fact, they view financial stocks as deeply undervalued with significant room to grow. The latest numbers show that financials are trading at the lowest PE of all S&P 500 sectors.
What hedge funds are doing?
Some of the biggest hedge funds are:
The Talas Turkey Value Fund returned 9.5% net for the first quarter on a concentrated portfolio in which 93% of its capital is invested in 14 holdings. The MSCI Turkey Index returned 13.1% for the first quarter, while the MSCI All-Country ex-USA was down 5.4%. Background of the Talas Turkey Value Fund Since its inception Read More
- Buying up Wells Fargo & Co (NYSE:WFC), ING Groep NV (ADR) (NYSE:ING), Voya Financial Inc (NYSE:VOYA), and Moody’s Corporation (NYSE:MCO)
- Overweight 8.6% financials compared to the S&P 500 (INDEXSP:.INX)
- Preparing for a rising interest rate environment where financials will benefit from rising yields
The data comes from the Global X GURU Index ($480m aum) which tracks the highest conviction ideas from the large hedge fund managers. The index rebalances quarterly, revealing the positions which managers are moving in and out of. Since inception in June 2012, it has returned 71% (vs 56% S&P 500).
GURU is available via an ETF that tracks the index.
To see what managers are doing, you can view the full GURU Report here.