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10 Financial Services Stocks to Buy According to Nathan Przybylo’s L2 Asset Management

·9 min read

In this article, we discuss the 10 financial services stocks to buy according to Nathan Przybylo's L2 Asset Management. If you want to skip our detailed analysis of these stocks, go directly to 5 Financial Services Stocks to Buy According to Nathan Przybylo's L2 Asset Management.

Nathan Przybylo, the founder of Boston-based L2 Asset Management, manages more than $177 million in assets under management at his hedge fund. Przybylo obtained a Bachelor's of Science degree in Applied Mathematics from Northwestern University in 2005. He then went to work as a senior analyst at Beghou Consulting. In 2010 he completed his MBA from Cornell University. Przybylo founded L2 Asset Management in in 2014 and serves as a partner at the firm.

Some of the top stocks in L2 Asset Management's portfolio at the end of the second quarter of 2021 were Apple Inc. (NASDAG:AAPL), Microsoft Corporation (NASDAQ: MSFT) and Alphabet Inc. (NASDAQ:GOOG).

Our Methodology

With this context in mind, here is our list of the 10 financial services stocks to buy according to Nathan Przybylo's L2 Asset Management.

Why should we pay attention to the stock picks of elite hedge funds? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Photo by Behnam Norouzi on Unsplash

10. Mastercard Incorporated (NYSE:MA)

L2 Asset Management Stake Value: $226,000

Percentage of L2 Asset Management’s 13F Portfolio: 0.2%

No. of Hedge Fund Holders: 156

Ranked tenth on our list of 10 financial services stocks to buy according to Nathan Przybylo's L2 Asset Management is Mastercard Incorporated (NYSE:MA). It operates in the credit services industry and provides transaction processing and other payment-related products and services globally. The company has a market cap of $343 billion.

According to latest security fillings, L2 Asset Management owns 618 shares worth $226,000 in Mastercard Incorporated (NYSE:MA). This represents 0.2% of the hedge fund’s 13F portfolio. At the end of the second quarter of 2021, 156 hedge funds in the database of Insider Monkey held stakes worth $17.1 billion in Mastercard Incorporated (NYSE:MA), up from 151 in the previous quarter worth $17 billion.

On August 17, analyst Tien-tsin Huang at JP Morgan kept an Overweight rating on Mastercard Incorporated (NYSE:MA) stock and raised his price target to $430 from $427.

Like Apple Inc. (NASDAG:AAPL), Microsoft Corporation (NASDAQ: MSFT) and Alphabet Inc. (NASDAQ:GOOG), Mastercard Incorporated (NYSE:MA) is one of the top stocks to buy according to Nathan Przybylo's L2 Asset Management.

Qualivian Investment Partners, in its Q2 2021 investor letter, mentioned Mastercard Incorporated (NYSE:MA). Here is what the investment management firm has to say about the company:

"Mastercard: Q2 revenue and EPS beat consensus estimates by 3.7% and 12% respectively. Operating margins also beat consensus by +240 bps. Gross domestic volume growth of +38.3% (+32.8% in constant currency) was buttressed by continued e-commerce strength and better in-store performance, while purchase volumes grew 41.8% (35.5% in constant currency). Cross border performance was strong, but durability remains uncertain given uncertainty arising from the Delta variant and its impact on travel and tourism. We believe Mastercard has a robust runway for growth given further travel recovery, new/existing partnerships, traction in digital payments, and ongoing economic recovery."

9. Visa Inc. (NYSE:V)

L2 Asset Management Stake Value: $280000

Percentage of L2 Asset Management’s 13F Portfolio: 0.25%

No. of Hedge Fund Holders: 162

Visa Inc. (NYSE:V) operates as a global payments technology company. It is based in San Francisco, California. The company is ranked ninth on our list of 10 financial services stocks to buy according to Nathan Przybylo's L2 Asset Management. The company provides digital payment facilities among consumers, merchants, financial institutions, businesses, strategic partners and government entities.

At the end of the second quarter of 2021, 162 hedge funds in the database of Insider Monkey held stakes worth $27.6 billion in Visa Inc. (NYSE:V), down from 164 in the preceding quarter worth $26.5 billion. According to the latest 13F filings, in the second quarter of 2021, L2 Asset Management owned 1,196 shares in Visa Inc. (NYSE:V). L2 Asset Management increased its stake in the company by 11% as compared to the previous quarter. Visa Inc. (NYSE:V) represents 0.25% of the total investment portfolio of the hedge fund at the end of second quarter of 2021.

8. SEI Investments Company (NASDAQ:SEIC)

L2 Asset Management Stake Value: $311000

Percentage of L2 Asset Management’s 13F Portfolio: 0.28%

No. of Hedge Fund Holders: 24

SEI Investments Company (NASDAQ:SEIC) is a global investment processing, investment management and investment operations solutions provider with its headquarters based in Oaks, Pennsylvania. It is eighth on our list of 10 financial services stocks to buy according to Nathan Przybylo's L2 Asset Management.

At the end of the second quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $294.9 million in SEI Investments Company (NASDAQ:SEIC), down from 27 in the preceding quarter worth $304.6 million. Our data shows that Royce & Associates is one of the leading shareholders in SEI Investments Company (NASDAQ:SEIC) with over 1 million shares worth $81 million.

In its Q2 2021 investor letter, Draco Global mentioned SEI Investments Company (NASDAQ:SEIC). Here is what Draco Global has to say about the company:

"SEIC (EUR 7,573m) is a financial company that offers asset management, back and midlle office services mainly to banks, insurers, fund managers, investment advisers, and family offices. Its competitive advantage comes from its software and its platform through a SaSS business via subscriptions that provide recurring income.

SEIC managed more than $ 786m and collected $ 370 at the end of 2020 (before LSV). Since it charges a fee on the assets managed and administered, part of the sales presents a high recurring revenue.

In essence, SEIC helps its clients with accounting, reporting, regulatory and CRM tasks all through its proprietary platform. Once the customer integrates into the SEIC interface, there is a high changeover cost that provides high customer retention.

We believe that the outsourcing of fund management presents a good business opportunity for SEIC. A more demanding regulatory environment and the needs of Capex in technology and people make outsourcing a structural trend of long-term growth in the sector. The expansionary policies of central banks also benefit the appreciation of financial assets, attracting higher assets under Management that increase future commissions.

We calculate a 2023e target value of $ 80 per share, upside potential at the current price of + 25%, and an IRR of 7%. Our average purchase price is $ 60 per share."

7. The Goldman Sachs Group, Inc. (NYSE:GS)

L2 Asset Management Stake Value: $630 million

Percentage of L2 Asset Management’s 13F Portfolio: 0.58%

No. of Hedge Fund Holders: 61

The Goldman Sachs Group, Inc. (NYSE:GS) is a New York-based financial services firm. Investment management, securities, asset management, prime brokerage and securities underwriting are the main services it provides. It ranks seventh on the list of 10 financial services stocks to buy according to Nathan Przybylo’s L2 Asset Management. The hedge fund increased its stake in the company by 74% in the second quarter of 2021.

On October 1, Citi kept a Buy rating on The Goldman Sachs Group, Inc. (NYSE:GS) and raised its price target to $440 from $410. In the second fiscal quarter, The Goldman Sachs Group, Inc. (NYSE:GS) reported an EPS of $15.02, surpassing estimates by $5.07.

Out of the hedge fund being tracked by Insider Monkey, Eagle Capital Management is one of the leading shareholders in The Goldman Sachs Group, Inc. (NYSE:GS) with 3.8 million shares worth $1.4 billion. At the end of the second quarter of 2021, 61 hedge funds in the database of Insider Monkey held stakes worth $5.2 billion in The Goldman Sachs Group, Inc. (NYSE:GS), down from 77 the preceding quarter worth $5 billion.

In its Q2 2021 investor Letter, Ariel Investments mentioned that The Goldman Sachs Group, Inc. (NYSE:GS) has posted a series of excellent quarterly results. Here is what Ariel Investments has to say about the company:

"Goldman Sachs Group Inc. (GS) returned +16.45%. Goldman has posted a series of excellent quarterly results. Merger and equity offering activity has been robust with trading profits bolstered by strong capital market volumes. Goldman’s asset management business has also performed well. Regulators recently moved to allow most large investment banks to return capital to shareholders through dividends and share repurchases. Fundamentally, we think Goldman Sachs is attractively priced at approximately 11 times earnings and a very reasonable multiple of book value."

6. Discover Financial Services (NYSE:DFS)

L2 Asset Management Stake Value: $1.1 million

Percentage of L2 Asset Management’s 13F Portfolio: 1.04%

No. of Hedge Fund Holders: 37

Ranked sixth on the list of 10 financial services stocks to buy according to Nathan Przybylo’s L2 Asset Management is Discover Financial Services (NYSE:DFS). It has a market cap of $38.5 billion. It is a financial services firm that owns and runs Discover Bank. This bank provides checking and savings accounts, home equity loans, personal loans, student loans and credit cards.

Przybylo’s L2 Asset Management owns 9,527 shares worth $1.1 million in Discover Financial Services (NYSE:DFS). This makes up 1.04% of the hedge fund’s holdings according to latest security filings.

In October, investment advisory Piper Sandler kept a Neutral rating on Discover Financial Services (NYSE:DFS) stock and increased its price target to $117 from $114. In the second fiscal quarter, Discover Financial Services (NYSE:DFS) reported an EPS of $5.55, beating estimates by $1.66. The firm’s revenue came in at $3.58 billion in the second fiscal quarter, an increase of 34.6% year over year, and beat revenue estimate by $570 million.

At the end of the second quarter of 2021, 37 hedge funds in the database of Insider Monkey held stakes worth $450.9 million in Discover Financial Services (NYSE:DFS), down from 45 the preceding quarter worth $654.3 million.

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Disclosure: None. 10 Financial Services Stocks to Buy According to Nathan Przybylo's L2 Asset Management is originally published on Insider Monkey.