We recently compiled a list of the Billionaire Israel Englander’s Top 10 Stock Picks Heading Into 2025. In this article, we are going to take a look at where Wells Fargo & Co. (NYSE:WFC) stands against the other stock picks.
Israel Englander has always inspired the investment world by founding and managing the second-most profitable hedge fund in history. The Brooklyn-born billionaire investor began his career on Wall Street in 1970. After gaining valuable experience in trading and investment management, he founded Millennium Management in 1989.
Millennium Management has become one of the world’s largest and most successful hedge funds, managing $210 billion in 13F securities as of Q3 2024. Innovative investment strategies and a focus on risk management are the tenets that have propelled the hedge fund to tremendous success. Since its inception, Englander’s hedge fund has averaged 14% in annual returns, solidifying its position in the highly competitive hedge fund landscape. The hedge fund has also racked up over $56 billion in cumulative profits for investors since its inception.
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Millennium Management had its best year in 2000, when the dot-com bust started, and the S&P 500 was down 10%. Thanks to its multi-strategy approach, it returned 35%, which consistently produces positive returns. As the CEO, Englander only had one down year, a 3% decline at the height of the financial crisis in 2008. The impressive performance stems from the billionaire investor focusing on unique investment strategies emphasizing diversification and risk management. Likewise, Englander advocates for a multi-strategy approach that makes it easy to capitalize on various market opportunities.
Millennium Management’s diversification strategy was highlighted when they sold tech stocks to invest in an index fund, emphasizing long-term growth and risk mitigation. Israel Englander remains focused on expanding the firm and leveraging technology to stay competitive.
In 2023, Israel Englander topped Bloomberg’s list of highest-earning hedge fund managers with $2.8 billion in net earnings. Millennium Management earned $600 million from commodities last year but lagged behind Citadel’s $8 billion in 2022. Bloomberg cited sources saying Millennium’s struggles are due to Englander’s tight control. Financial Times reported Millennium manages $60 billion in assets, employs 5,400 people, and has 17 offices. The fund returned 8.3% in 2023, 12.5% in 2022, 13.6% in 2021, and 25.9% in 2020.
Millennium Management was one of the hedge funds that benefited from the overall stock market rally, with the S&P 500 gaining 24% in 2024 due to optimism around artificial intelligence and interest rate cuts. The hedge fund also benefited from its exposure to many of the ‘Magnificent 7’ stocks, which were behind much of the actions in 2024.
After two straight years of annual gains, the focus in the equity markets is on stocks that can maintain the upward momentum in 2025. Billionaire Israel Englander’s top stock picks are well poised to benefit from a strong US economy. While the billionaire investor’s portfolio consists of tech stocks, it also consists of investment plays in healthcare, industrials and materials sectors. With that, let’s take a look at some of his top stock picks.
Our Methodology
We analyzed Millennium Management’s portfolio to make a list of billionaire Israel Englander’s top 10 stock picks heading into 2025. We then settled on Englander’s top ten holdings and analyzed them to determine why they stand out in generating long-term value. We then ranked these companies in ascending order based on the hedge fund’s stake value.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of bankers in suits, discussing the success of the company’s banking products.
Wells Fargo & Co. (NYSE:WFC)
Millennium Management’s Stake Value: $535.42 Million
Number of Hedge Fund Holders: 72
Wells Fargo & Co. (NYSE:WFC) is a financial services company offering a wide range of banking, investment, mortgage, and consumer and commercial finance products and services. The company has approximately $1.9 trillion in assets. It was one of the best-performing banking stocks, rallying by about 44% in 2024. Likewise, it is one of billionaire Israel Englander’s top stock picks owing to the tremendous opportunities for growth.
In the first nine months of 2024, Wells Fargo & Company (NYSE:WFC) experienced a 9.6% decline in net interest income, primarily due to a 45% increase in interest expenses. The bank has been diversifying its revenue sources as it seeks to reduce its reliance on net interest income. Consequently, Wells Fargo has been strengthening its corporate investment bank unit in pursuit of new growth opportunities.
Wells Fargo & Co. (NYSE:WFC) prioritized serving its independent advisers and consumer banking customers, which should eventually spur development. It’s also focused on expanding its treasury management business and offering clients investment banking and market capabilities.
While Wells Fargo has operated under an asset cap imposed by regulators as a penalty over its fake accounts scandal, that cap could be removed soon. The cap has restricted the bank from growing its balance sheet, making it difficult to expand its loan basket and generate interest income.
Wells Fargo & Co. (NYSE:WFC) CEO Charlie Scharf has done a good job streamlining the bank’s regulatory framework, cutting costs, and concentrating on the bank’s core business. Scharf has also started to enhance higher-returning operations, such as investment banking and credit card lending, that the bank hasn’t fully utilized in the past.
Overall WFC ranks 9th on our list of Billionaire Israel Englander’s top stock picks heading into 2025. While we acknowledge the potential of WFC as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than the ones mentioned on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.