Bill Miller, chairman and co-chief investment officer of Legg Mason Capital Management, is one of the most celebrated fund managers of our time. Although he certainly has had a difficult few years as of late, I'm always apt to listen when he speaks up.
Recently he voiced his opinion that large-cap stocks are extreme bargains, saying that "After spending 10 years in the wilderness, high-quality U.S. large capitalization stocks are cheap compared to bonds".
So in order to find out exactly which large-caps Miller likes, I checked out the holdings of his prestigious Legg Mason Capital Management Value Fund (LGVAX). While Miller's fund is widely diversified with power stocks like AES Corporation to media companies such as Time Warner, there is one glaring theme that I noticed. About 27.5% of his entire portfolio is comprised of financial stocks -- easily making the largest and most important segment in his fund.
Following Miller's lead, I decided to use the intelligence of our 165,000 CAPS investing community to try and find the best and brightest large-cap financials around. I ran a screen for large-cap stocks in the financial sector with a 4 or 5-star CAPS rating, and then sorted them by the number of "outperform" calls. Each time a CAPS member indicates an outperform call on a stock, the rating increases, and time has shown that highly rated stocks generally do better than companies with poor ratings.
The list below comprises the seven stocks in our investing community with the most outperform calls, in rank order:
|
Stock |
Market Cap
|
CAPS Rating
|
No. of Outperform Calls |
|---|---|---|---|
|
Berkshire Hathaway (NYSE: BRK-B) |
$189.9 |
***** |
5,450 |
|
Berkshire Hathaway (NYSE: BRK-A) |
$189.9 |
**** |
2,998 |
|
US Bancorp (NYSE: USB) |
$42.4 |
**** |
1,834 |
|
Aflac (NYSE: AFL) |
$22.4 |
**** |
1,465 |
|
Brookfield Asset Management (NYSE: BAM) |
$14.5 |
***** |
1,193 |
|
ING Groep N.V. (NYSE: ING) |
$35.5 |
**** |
1,017 |
|
Lloyds Banking Group (NYSE: LYG) |
$74.5 |
**** |
996 |
Source: CAPS data, Aug. 16th.
Although many investors are still licking their wounds from the financial crisis of 2008, these stocks could offer great value at a time when the market is suffering from a weak recovery -- clearly, they're very popular among the Motley Fool community. This may not be enough to initiate a screaming "buy," but they're certainly a good place to start your own due diligence if you're in the market for financials.
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