The value of bank stocks held by the industry's top 25 institutional investors rose 8.1% in the second quarter, according to an American Banker survey.
The top 25 increased their stake in bank stocks by $23 billion during the quarter, to $284 billion, the survey said, and holdings of the top 50 investors increased 6.8%, to $372 billion. (Tables appear on pages 35 and 36.)
The investors were putting their money on such household-name bank stocks as Citigroup and Bank of America Corp.
"People were just adding to what they had," said David Ellison, portfolio fund manager analyst at FBR Fund Advisors in Boston. "Most of the new money came into names that were already widely held, which would explain the performance of the widely held names. Nobody wants to venture out into a new name."
The percentage growth as tracked for American Banker by Thomson Financial Securities Data from filings with the Securities and Exchange Commission was the best in seven quarters, partially reflecting strong stock price performance. The Standard & Poor's bank index gained 5.7% in the quarter.
Professional investors raised their collective stake in Citigroup by 6.1%, to $106 billion, most of that because of a 4.9% increase in the stock price. Holdings of Bank of America stock increased 4.7%, to $76.8 billion, as its stock went up 3.8%.
Holdings of Wells Fargo shares rose 6.5%, to $47.7 billion, as the share price gained 22%, indicating some investors were taking profits on Wells.
The largest 15 institutional investors were less bullish on thrift stocks, as the aggregate value of their holdings rose 3.7%, to $13.9 billion.
Though institutional owners are doing well by sticking with big names, buyers should beware, Mr. Ellison said. "The institutional side is a double-edged sword," he said. If other big banks besides First Union Corp. or Bank One Corp. miss their earnings estimates, "just wait."