These Are Billionaires’ Favorite Finance Stocks

Visa is the most commonly owned stock in the top 10 financial holdings of the hedge funds analyzed -- a vote of confidence from billionaires in the company’s stability and potential.

Visa is followed by CME Group, KKR, Nu Holdings, and S&P Global. That group of stocks spans financial services, investment banking and management, and market infrastructure, which is indicative of how the hedge funds analyzed have diversified financial stock holdings.

Eleven of the 25 stocks that appear in the top 10 financial holdings of more than one hedge fund provide banking services, and nine are in investment banking or investment services. Relatively few fintech firms appear in more than one of the hedge funds’ top investments.

That’s a reflection of billionaires’ approach to investing in financial stocks: relying on finance industry stalwarts to balance smaller investments into potential high-growth disruptors.

The top finance stocks billionaires are investing in by hedge fund

The top finance stocks held by Citadel

• Total value of all financial stock investments: $8.6 billion
• Percent of portfolio in finance stocks: 8.7%

Ken Griffin’s Citadel’s top finance sector investments are largely composed of companies with relatively long, stable track records. The fund takes a relatively cautious approach to the sector: Its top three investments are JPMorgan Chase, S&P Global, and Citigroup. Other household companies such as Bank of America and Visa appear in the funds’ top investments as well.

Citadel’s two most growth-oriented finance sector investments are KKR, a private equity and real estate investment firm, and Coinbase, which offers infrastructure and technology services to support cryptocurrency transactions. Citadel’s investment into Coinbase is the only pure cryptocurrency play in the top 10 financial sector investments among the funds analyzed for this article.

The top finance stocks held by Renaissance Technologies

• Total value of all financial sector investments: $1.7 billion
• Percent of portfolio in finance stocks: 2.6%

Jim Simons’ Renaissance Technologies takes a balanced approach to its holdings in the finance sector, which account for just 2.6% of the funds’ overall portfolio.

Its top 10 financial sector stocks are spread across exchanges via Cboe Global Markets and CME Group, payment processing through Visa, banking through JPMorgan Chase, asset management through WisdomTree and Invesco, insurance through CoreVel and Progressive, and fintech via Nu Holdings and Opendoor Technologies.

These holdings suggest a mostly cautious approach to the finance sector, with Nu Holdings and Opendoor as exceptions to a set of stocks that are otherwise mostly large cap and low volatility.

The top finance stocks held by Bridgewater Associates

• Total value of all financial sector investments: $0.898 billion
• Percent of portfolio in finance stocks: 5.0%

Ray Dalio’s Bridgewater Associates takes a low-to-moderate risk approach to its investments in the financial sector. The fund’s top finance company holdings are a mix of large-cap stocks and companies that provide foundational financial services.

It would be a stretch to call any of the companies in Bridgewater’s top financial sector investments disruptive. Its largest investments are in the payment processing giant Visa and a pair of insurance leaders, MetLife and Progressive.

That the fund isn’t taking big swings with its top financial sector investments is reflected in the fact that just 5% of Bridgewater’s portfolio is allocated to the sector.

The top finance stocks held by BlueCrest Capital Management

• Total value of all financial sector investments: $0.032 billion
• Percent of portfolio in finance stocks: 5.4%

Michael Platt’s BlueCrest Capital Management is top-heavy when it comes to financial sector investments. Two investments account for more than 80% of its finance sector holdings:

• Apollo Global Management makes up 3% of its portfolio but 55% of its finance sector holdings. The company is a leader in alternative asset management.
• Mr. Cooper Group makes up 1.5% of its portfolio, good for 28% of its finance sector investments. The company is a non-bank mortgage and loan origination servicer.

No other finance stock makes up more than 0.4% of BlueCrest’s portfolio. The remainder of its top financial stock holdings are a mix of relatively stable, large-cap companies.

The top finance stocks held by Millennium Management

• Total value of all financial sector investments: $8.3 billion
• Percent of portfolio in finance stocks: 7.9%

About 8% of Israel Englander’s Millennium Management portfolio is made up of stocks in the financial sector, but no single investment in that sector makes up more than 0.75% of the fund’s total portfolio.

As a result, Millennium’s financial sector holdings are balanced in terms of allocation. The investments are diversified as well, with companies held in private equity, financial services, and traditional banking.

Evercore, an investment bank, and LPL Financial, an independent broker-dealer, stand out as investments with the potential for more growth and more risk.

The top finance stocks held by Tiger Global Management

• Total value of all financial sector investments: $1.3 billion
• Percent of portfolio in finance stocks: 9.6%

Tiger Global Management’s top financial holdings are concentrated in Apollo Global Management, which accounts for 84% of its investments in the sector and 8.1% of its entire portfolio.

Chase Coleman’s fund has just two other financial sector investments: Nu Holdings, which makes up 1.2% of its overall portfolio, and AltC Acquisition Corp., a Special Purpose Acquisition Company (SPAC) helmed by OpenAI’s Sam Altman.

Tiger Global’s financial sector portfolio is aggressive. Its strong conviction in Apollo Global Management creates a concentration risk, and the fund’s other two other financial sector holdings are not without risk. AltC Acquisition Corp. is a SPAC, which carries inherent risk, and Nu Holdings is a relatively young fintech company operating in an emerging market.

The top finance stocks held by D.E. Shaw & Co.

• Total value of all financial sector investments: $3.6 billion
• Percent of portfolio in finance stocks: 5.3%

David Shaw’s hedge fund, D.E. Shaw & Co., devotes just over 5% of its portfolio to finance sector stocks, and not a single holding in the sector accounts for more than 0.6% of the funds’ total holdings. That’s a reflection of the funds’ approach to investing in finance sector stocks: diversification across different companies, subsectors, and risk profiles.

D.E. Shaw’s top finance sector investment is Nu Holdings, a relatively young fintech company operating in Latin America. Upstart Holdings, an insurance company that leverages AI to assess policies, is another more growth-oriented investment in the funds’ top finance stocks.

Those plays are accompanied by investments in industry leaders such as Visa, American Express, Progressive, and JPMorgan Chase.

The top finance stocks held by Tudor Investment Corp.

• Total value of all financial sector investments: $0.597 billion
• Percent of portfolio in finance stocks: 8.3%

Paul Tudor Jones’ Tudor Investment Corp. tilts its top financial holdings toward insurance companies.

Aon, which provides a broad range of insurance services, is the fund’s top financial sector investment. Two other insurance providers appear in the fund’s top 10 financial stocks: Markel Group, which provides specialty insurance and reinsurance products, and Willis Towers Watson PLC, which provides a number of different insurance services.

Tudor is the only fund to hold those three companies in its top 10 financial sector holdings.

Alongside those companies, Tudor’s top 10 is composed of banks, financial services companies, and asset and investment management firms.

The fund’s approach is moderate, with industry leaders like Visa, Moody’s and S&P Global appearing alongside more growth-oriented investments in Blue Owl Capital and FS KKR.

The top finance stocks held by Coatue Management

• Total value of all financial sector investments: $1.1 billion
• Percent of portfolio in finance stocks: 5.0%

Philippe Laffont’s Coatue Management hedge fund splits its financial sector investments largely between fintech and traditional bank stocks. Coatue’s financial sector investments are concentrated in two stocks:

• Nu Holdings, a digital banking provider operating in Latin America, is the fund’s top financial sector holding, accounting for nearly half of its financial sector portfolio.
• First Citizens BancShares, a traditional bank which accounts for 40% of the fund’s financial sector holdings.

Coatue’s choice to seek growth in the sector through a potentially disruptive fintech company operating in an emerging market, balanced with a sizable stake in a more proven traditional bank, is similar to the approach other hedge funds have taken with their financial sector investments. What sets Coatue apart is its decision to deploy that strategy largely through just two companies instead of diversifying its financial sector investments across a handful of stocks.

The top finance stocks held by Two Sigma Investments

• Total value of all financial sector investments: $2.1 billion
• Percent of portfolio in finance stocks: 5.3%

Two Sigma Investments, led by billionaires John Overdeck and David Siegel, holds a diversified and balanced set of financial sector stocks.

The fund has taken a moderate approach to the sector, with investments in key, large-cap companies alongside stakes in companies that carry more risk and growth potential. Its top 10 financial sector stocks are composed of payment processors, insurance companies, financial services firms, business development companies, and asset management firms.

Like many other funds analyzed, Visa is Two Sigma’s top financial sector investment. That’s followed by a pair of investments in a pair of companies that seek to shake up the financial services landscape: SoFi and Nu Holdings. Two Sigma is the only fund to feature XP in its top financial sector holdings, which is a fast-growing financial services firm based in Brazil. It offers investment management and financial advisory services.

MetLife, Moody’s, Progressive, and CME Group round out Two Sigma’s investments into solid financial sector leaders.

The top finance stocks held by The Children’s Investment Fund

• Total value of all financial sector investments: $13.0 billion
• Percent of portfolio in finance stocks: 36.3%

Christopher Hohn’s The Children’s Investment Fund devotes more than one-third of its portfolio to the financial sector and splits its investment roughly evenly into just three companies: Moody’s, Visa, and S&P Global.

While the fund’s financial sector investments are concentrated, the companies selected are industry leaders that enjoy competitive moats and provide essential financial services. The companies themselves reflect a cautious approach, and each covers a different niche within the sector. Still, the heavy concentration creates some inherent risk in the portfolio.

The top finance stocks held by Soros Fund Management

• Total value of all financial sector investments: $0.167 billion
• Percent of portfolio in finance stocks: 6%

George Soros' hedge fund is well-diversified when it comes to financial sector stocks. It includes established key players and a few smaller companies with higher growth potential. That latter category makes up a relatively small percentage of the fund’s financial sector investments, and overall, Soros has taken a cautious approach to his holdings in the sector.

Cboe Global Markets is the top financial sector investment for the fund. The company operates options exchanges worldwide. That’s not the only brokerage in Soros’ top financial sector investments: He’s also taken stakes in Interactive Brokers and CME Group, providing diversification in the subsector.

The rest of the fund’s top financial sector holdings are spread across insurance (RenaissanceRe, Allstate, Corebridge), and banking (New York Community Bancorp, KeyCorp). Soros Fund Management has a small amount of exposure to asset management through its stake in Brightsphere Investment Group, as well as financial services through BGC Group.

The top finance stocks held by Caxton Associates

• Total value of all financial sector investments: $.200 billion
• Percent of portfolio in finance stocks: 10.3%

Bruce Kovner’s Caxton Associates top financial sector holdings focuses on traditional and investment banks, financial services, and market exchanges. It’s a diversified portfolio showcasing a cautious approach.

Its top two financial sector holdings -- Bank of America and Goldman Sachs -- provide solid stability to the rest of its investments in the sector. KeyCorp, Fifth Third Bancorp, U.S. Bancorp, and HDFC Bank round out its banking investments. Ally Financial offers exposure to a digital-first financial service provider.

Caxton holds three niche finance stocks in its top 10:

• Jackson Financial, one of the largest writers of annuities in the U.S., as well as an investment manager.
• CME Group, which operates markets for futures and options trading.
• MarketAxess Holdings, which operates a platform for trading fixed income securities.

The top finance stocks held by Viking Global Investors