Source: Zhitong Finance
The US investment information website Insider Monkey recently compiled a list of the top ten most popular financial stocks for hedge funds, “One of Wall Street Brothers”$JPMorgan (JPM.US)$It is at the top of the list. Other stocks that made the list include:$S&P Global (SPGI.US)$,$Citigroup (C.US)$,$KKR & Co (KKR.US)$,$Progressive (PGR.US)$,$Bank of America (BAC.US)$,$Apollo Global Management (APO.US)$,$Wells Fargo & Co (WFC.US)$,$Goldman Sachs (GS.US)$,$Discover Financial Services (DFS.US)$.
According to Insider Monkey's database of 920 hedge funds, the number of hedge funds holding J.P. Morgan positions rose from 103 to 112 in the first quarter of 2024. The total value of these holdings is approximately $8.41 billion. Ken Fisher's Fisher Asset Management was the hedge fund that held the most shares in J.P. Morgan Chase during this period.
Carillon Eagle Growth & Income Fund stated in an investor letter for the first quarter of 2024: “With solid financial results and positive guidance for the rest of 2024, J.P. Morgan Chase has made a positive contribution to the fund's performance. Furthermore, increasing discussions surrounding increased capital market activity may be the reason for the stock's strong performance compared to other banks. Recall that J.P. Morgan Chase has a strong capital markets business.”
Since this year, J.P. Morgan's stock price has risen by nearly 26%. According to financial reports, the bank's Q2 revenue was $50.2 billion, up 21.5% year on year, 4.54 billion US dollars higher than market expectations; non-GAAP earnings per share were 4.4 US dollars, higher than market expectations; net profit was 18.1 billion US dollars, up 25% year over year, setting a record high and exceeding expectations of 17.3 billion US dollars.
According to TipRanks data, Wall Street analysts gave J.P. Morgan Chase a “moderate buy” rating. The average target price is $220.49, which is 5% higher than the current level.
Crisis and opportunity coexist in the US financial sector
Insider Monkey pointed out in the report that the US financial services industry has ushered in a dynamic and challenging year due to economic, technological and regulatory factors.
The global economy is expected to grow moderately, and advanced economies such as the US are expected to grow by about 1.4%. This has been affected by geopolitical tensions, climate-related disruptions,$Qualcomm (QCOM.US)$The effects of continued inflation. These macroeconomic conditions are expected to have a significant impact on the operations and profitability of financial institutions. High interest rates are a double-edged sword for the industry. Although high interest rates have led to a significant increase in net interest income (especially large banks), they have also boosted financing costs (especially small banks and regional banks) and squeezed the profit margins of financial institutions. Economic uncertainty and the possibility of slowing growth have prompted banks to increase loan loss provisions to deal with potential defaults. This trend is expected to continue, reflecting the cautious attitude of financial institutions in managing credit risk in the face of economic fluctuations and increased regulatory scrutiny.
Meanwhile, the financial services industry is undergoing major technological changes. Advances in artificial intelligence and generative artificial intelligence will transform every aspect of the industry, from retail investments and fraud detection to insurance products. However, these advancements have also brought new risks, such as increased potential for fraud and the need for strong cybersecurity measures. Regulations are also becoming more stringent, particularly with regard to climate-related disclosure and sustainability. These regulatory changes, along with technological advancements, are forcing financial institutions to innovate and develop their business models and strategies.
However, major US banks recently withstood the test of assuming a 40% drop in commercial real estate values during the Federal Reserve's annual tests, which allayed people's concerns about the banking industry in the context of high interest rates. Chris Marinac, head of research at Janney Montgomery Scott, commented: “In many ways, banks should be relieved to be able to withstand a serious crisis. However, that doesn't mean the Federal Reserve thinks the commercial real estate market is safe. We are still in the early stages of this credit cycle.”
Looking ahead, Insider Monkey said rapid technological advancements — including generative artificial intelligence, cloud migration, increased fraud and cyber risk, and industry convergence through embedded finance — will require financial services leaders to be more agile than ever before. Throughout history, the financial services sector has often driven progress by helping organizations and individuals cope with economic and social changes. Investing now in innovative products and services that drive positive results can give your business a continued competitive advantage for years to come.
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