CME Group (CME): One of the Best Financial Stocks Billionaires Are Investing In
April 1, 2025
We recently published a list of 10 Best Financial Stocks to Buy According to Billionaires. In this article, we are going to take a look at where CME Group Inc. (NASDAQ:CME) stands against other best financial stocks to invest in.
Financial stocks had a great run in 2024, jumping over 30% by mid-December and outpacing the broader market. Fidelity noted that concerns about bank failures faded as the economy stayed strong, and improving fundamentals kept the sector on track. With the Fed cutting rates for the first time since the pandemic, lower borrowing costs could boost economic activity, even if they squeeze bank profit margins a bit. There are still risks, like commercial real estate exposure and loan defaults, but the post-election landscape looks favorable, with lighter regulations and more deal-making. Heading into 2025, financial stocks have solid momentum and plenty of tailwinds. This shift is creating fresh opportunities across the financial sector, from capital markets to private credit.
According to Morgan Stanley, capital markets are making a big comeback in 2025, strengthened by lower interest rates, easing inflation, and steady economic growth. After a period of uncertainty, companies and investors are finally feeling confident enough to jump back into mergers, acquisitions, and major spending. With more cash flowing into the market, demand for private credit and infrastructure investments, especially in AI, is on the rise. Private credit is also having a moment, offering companies more flexible financing options. It is growing fast, with assets under management expected to double in the next few years. Many businesses are using private markets to refinance debt and fuel expansion. 2025 is shaping up to be a huge year for strategic deals, leveraged buyouts, and capital raising.
Mergers and acquisitions in financial services are set to stay strong in 2025. After a year of big-money deals in 2024, companies are still looking for ways to grow, stay competitive, and adapt to market shifts. While economic uncertainty and geopolitical tensions remain, financial firms are using M&A to keep up with new technologies, changing customer expectations, and regulatory changes. Many banks and financial institutions are eyeing fintech acquisitions to stay ahead in the digital space while selling off underperforming parts of their business to free up capital for high-growth opportunities. Larger deals are becoming more common, especially as potential financial deregulation in the US could shake up global markets.
Some of the wealthiest billionaires have built some of the world’s largest financial firms or continue to hold major ownership positions in them. These companies specialize in asset management, financial data services, and cryptocurrency trading. Take Warren Buffett, for instance. Investors around the world look to his portfolio for guidance. His investment strategy heavily favors financial stocks, with significant holdings in banks, payment technology firms, and insurance companies. By the end of 2024, he had committed over $100 billion to the financial sector, representing a substantial share of his estimated $267 billion portfolio. Like Buffett, there are lots of billionaire portfolios to watch out for. So, let’s dive into the best financial stocks that Wall Street moguls are backing.
A businessman in the foreground shaking hands with a colleague in a trading floor.
To collect data for this article, we scanned Insider Monkey’s database of billionaires’ stock holdings and picked the top 10 companies operating in the financial services industry with the highest number of billionaire investors in Q4 of 2024. The stocks are ranked in ascending order based on the number of billionaire investors.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Number of Billionaire Investors: 21
CME Group Inc. (NASDAQ:CME) operates global markets for trading futures and options across different asset classes, including equities, interest rates, foreign exchange, commodities, and metals. It also provides clearing services, risk management solutions, and market data offerings. CME ranks 4th on our list of the best financial stocks.
On March 25, CME Group Inc. (NASDAQ:CME) and Google Cloud shared that they are expanding their partnership by testing Google’s Universal Ledger to streamline wholesale payments and asset tokenization. This innovative, distributed ledger aims to simplify financial transactions and enhance efficiency in traditional markets. With initial testing completed, CME and Google Cloud plan to collaborate with market participants later this year, targeting a full launch in 2026.
CME Group Inc. (NASDAQ:CME) reported $1.5 billion in Q4 revenue and $6.1 billion for the full year. Net income for the quarter was $875 million, while full-year net income reached $3.5 billion. This was driven by record growth in trading volume across asset classes, particularly in interest rates, agriculture, foreign exchange, and metals. As of December 31, 2024, the company held $3.1 billion in cash and $3.4 billion in debt. In 2024, the company had $3.1 billion in cash and $3.4 billion in debt. In 2024, it returned $3.8 billion to shareholders through dividends, including a $2.1 billion variable dividend.
On February 6, CME Group Inc. (NASDAQ:CME) raised its quarterly dividend by 8.7% to $1.25 per share. The dividend was distributed on March 26, to shareholders on record as of March 7.
Overall, CME ranks 4th on our list of the best financial stocks to buy according to billionaires. While we acknowledge the potential of CME to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CME but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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