We recently compiled a list of Norwegian Billionaire Halvorsen's Top 10 Stock Picks.In this article, we are going to take a look at where U.S. Bancorp (NYSE:USB) stands against Halvorsen's other top stock picks.
Ole Andreas Halvorsen, the founder and CEO of Viking Global, has built one of the most respected names in the hedge fund world. Born in Norway, Halvorson graduated with an undergraduate degree in economics from Williams College in 1986. He then later earned a postgraduate business degree from Stanford University. Having received his first taste of finance while working for Morgan Stanley, he’s part of an elite group of investors known as the “Tiger Cubs,” former protégés of hedge fund legend Julian Robertson, who went on to launch their own successful firms.
Viking Global, based in Greenwich, Connecticut, has grown into an investment powerhouse. Back in 2023, the firm delivered an impressive $6 billion in returns for its investors, ranking just behind heavyweights like Citadel and TCI. Much of this success came from smart bets on big names. In the same year, Halvorsen decided to reopen Viking Global's long/short flagship fund to new investors. Over a decade ago, he had closed the fund, citing its size as a barrier to uncovering profitable trading opportunities.
That said, Halvorsen isn't just about bullish bets. While long positions are Viking Global's bread and butter, the firm has also employed strategies that allow it to profit from short positions during turbulent market years like 2020 and 2022. The billionaire firmly believes that effective and profitable trading requires careful analysis and disciplined, long-term valuation. This philosophy has shaped Viking Global's portfolio into a balanced mix of both long-term and short-term investments. While his primary focus remains on long-term stakes in public and private companies, Halvorsen isn’t afraid to embrace "thoughtful risk-taking" to maximize returns. This balanced approach, combining strategic risk with a commitment to disciplined analysis, is at the heart of Viking Global’s success.
This year, Viking’s funds have been making a strong comeback. Its hybrid fund, Viking Global Opportunities, which invests in both public stocks and private companies, earned a modest 1% return in the third quarter, trimming its year-to-date losses to 1.6%. Meanwhile, its private-asset fund, Viking Global Opportunities Drawdown, gained 4.2% for the quarter, bringing its total return for the year to 8.3%. After a rough second quarter, these results show Viking is back on track and making waves in the investment world. Overall, as of Q3 2024, Halvorsen’s 13F portfolio reflects a strong focus on the healthcare, finance, services, and technology sectors. The portfolio's total value stands at over $27.43 billion, marking a 1.05% increase compared to the previous quarter.
Our Methodology
For this analysis, we examined Viking Global's stock portfolio from the third quarter of 2024. The stocks are ranked based on the firm’s stake value in each holding.
Why are we interested in 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).
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Headquartered in Minneapolis, Minnesota, and incorporated in Delaware, U.S. Bancorp (NYSE:USB) is one of the leading American bank holding companies. It operates as the parent organization of U.S. Bank National Association and is recognized among the largest banking firms in the country.
Citi analyst Keith Horowitz recently upgraded U.S. Bancorp (NYSE:USB) stock from Neutral to Buy, raising the price target significantly from $49 to $65. The stock had underperformed its peers due to concerns over a potential decline in return on tangible common equity (ROTCE), stemming from heightened investment spending, disappointing payment trends, and lower-than-expected net interest margin (NIM). However, Horowitz highlighted that the bank is making progress, with its investment spending now positioning the company for positive operating leverage as expense growth decelerates.
In Q3 2024, U.S. Bancorp (NYSE:USB) delivered robust results, reporting a net income of $1.71 billion, a 12.5% increase year-over-year, while diluted earnings per share rose to $1.03, compared to $0.91 in the same quarter last year. This strong performance was primarily driven by a 2.8% rise in net interest income, which reached $4.17 billion, supported by higher interest rates on earning assets and disciplined liability management. Although the quarter included $119 million in securities losses, these were largely offset by lower tax expenses due to favorable tax settlements.
Additionally, the bank maintained solid credit quality, aligning with expectations, and reinforced its capital position with a Common Equity Tier 1 (CET1) capital ratio of 10.5%. U.S. Bancorp (NYSE:USB) remains focused on balancing capital growth through earnings accretion with capital distributions and has indicated plans to resume share buybacks in the near future.
Overall USB ranks 1st on our list of Halvorsen's top stock picks. While we acknowledge the potential of USB as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than USB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
