Is Lloyds Banking Group (LYG) A Smart Long-Term Buy?

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Fiduciary Management Inc., an investment management firm, published its “International Equity” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 7.2% (currency hedged) was reported by the FMI International portfolios for the Q1 of 2021, compared to its MSCI EAFE benchmark that delivered a 7.59% return in local currency (LOC) and 3.48% in U.S. Dollars (USD) over the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Fiduciary Management, in their Q1 2021 investor letter, mentioned Lloyds Banking Group plc (NYSE: LYG) and shared their insights on the company. Lloyds Banking Group plc is a London, United Kingdom-based financial services company that currently has a $41.8 billion market capitalization. Since the beginning of the year, LYG delivered a 19.38% return, extending its 12-month gains to 65.95%. As of April 14, 2021, the stock closed at $2.3482 per share.

Here is what Fiduciary Management has to say about Lloyds Banking Group plc in their Q1 2021 investor letter:

“In the first quarter of 2020, we purchased Lloyds Banking Group PLC, which is the market leader in the homogenous and consolidated U.K. market. With Lloyds we were able to buy a well-capitalized, low-cost, high-quality bank that traded down to around half of tangible book value. The loan book is roughly two-thirds residential mortgages with an average loan-to-value of under 45%, allowing us to sleep at night.”

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Our calculations show that Lloyds Banking Group plc (NYSE: LYG) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Lloyds Banking Group plc was in 5 hedge fund portfolios. LYG delivered an 18.53% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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