What Provides Webster Financial Corporation (WBS) a Strong Competitive Advantage?

Diamond Hill Capital, an investment management company, released its “Select Strategy” first-quarter 2024 investor letter. A copy of the letter can be downloaded here. The portfolio appreciated double digits in Q1 outperforming the Russell 3000 Index. The strategy returned 12.66% gross of fees and 12.43% net of fees vs 10.02% for the index. The relative performance of the portfolio concentrated on discretionary, financials, and consumer staples holdings however industrials and healthcare holdings, while positive on an absolute basis, trailed benchmark peers, posing a relative headwind in Q1. Relative performance was also negatively impacted by lack of exposure to the communication services sector. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Diamond Hill Select Strategy highlighted stocks like Webster Financial Corporation (NYSE:WBS), in the first quarter 2024 investor letter. Webster Financial Corporation (NYSE:WBS) is a bank holding company for Webster Bank, National Association. The one-month return of Webster Financial Corporation (NYSE:WBS) was -12.72%, and its shares gained 0.35% of their value over the last 52 weeks. On June 10, 2024, Webster Financial Corporation (NYSE:WBS) stock closed at $40.93 per share with a market capitalization of $6.916 billion.

Diamond Hill Select Strategy stated the following regarding Webster Financial Corporation (NYSE:WBS) in its first quarter 2024 investor letter:

"Among our bottom Q1 contributors were Humana, Extra Space Storage and Webster Financial Corporation (NYSE:WBS). Self-storage real estate investment trust (REIT) Extra Space Storage and HSA-focused bank Webster Financial performed well at the end of 2023 as investors anticipated interest rate cuts and easier financial conditions in 2024. As this sentiment largely reversed in early 2024 against a resilient economic backdrop and still-elevated interest rates, real estate (and REITs broadly) and banks were pressured in Q1 (though it’s worth noting Webster Financial shares were modestly positive in the quarter). However, we believe Extra Space Storage has a high-quality, long-term franchise with an industry-leading operating platform that should position it well in the future. Similarly, we believe Webster Financial’s large HSA account platform and diverse deposit base is a strong competitive advantage in the current macroeconomic environment."

A close up of a hand pressing a mobile banking app displayed on a tablet or smartphone.

Webster Financial Corporation (NYSE:WBS) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held Webster Financial Corporation (NYSE:WBS) at the end of the first quarter which was 41 in the previous quarter. While we acknowledge the potential of Webster Financial Corporation (NYSE:WBS) as an investment, our conviction lies in the belief that 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Webster Financial Corporation (NYSE:WBS) and shared the list of best local bank stocks to invest in. In the previous quarter, Webster Financial Corporation (NYSE:WBS) was one of the top contributors of Diamond Hill Capital. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.