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After a tough year for the financial sector, do you think financial stocks are on the verge of a comeback? For a closer look at financials currently favored by hedge funds, we ran a screen.

We began by screening the financials sector for stocks that appear to be undervalued relative to earnings growth, with PEG below 1.

We then screened for those with bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to outperform.

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Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis.

List sorted by net institutional purchases over the last quarter as a percent of share float.

1. Capital One Financial Corp. (NYSE:COF): Operates as the bank holding company for the Capital One Bank, National Association and Capital One, National Association, which provide various financial products and services in the United States, Canada, and the United Kingdom. Market cap at $23.B, most recent closing price at $50.34. PEG at 0.71. Net institutional purchases in the current quarter at 89.5M shares, which represents about 17.79% of the company's float of 503.20M shares.

2. American International Group, Inc. (NYSE:AIG): The company operates property and casualty insurance networks worldwide and conducts activities in the U.S. life insurance and retirement services industry. Market cap at $52.49B, most recent closing price at $29.26. PEG at 0.19. Net institutional purchases in the current quarter at 74.9M shares, which represents about 15.04% of the company's float of 497.87M shares.

3. AmTrust Financial Services, Inc. (NASDAQ:AFSI): Operates as a multinational specialty property and casualty insurance company in the United States and internationally. Market cap at $1.76B, most recent closing price at $29.05. PEG at 0.93. Net institutional purchases in the current quarter at 2.9M shares, which represents about 9.51% of the company's float of 30.51M shares.

4. Artio Global Investors Inc. (NYSE:ART): A publicly owned asset management holding company. Market cap at $181.41M, most recent closing price at $3.05. PEG at 0.38. Net institutional purchases in the current quarter at 4.0M shares, which represents about 8.94% of the company's float of 44.72M shares.

5. Hercules Technology Growth Capital, Inc. (NYSE:HTGC): Is a private equity, venture capital, and venture debt firm specializing in providing debt and equity to privately held venture capital and private equity backed companies and select publicly-traded companies. Market cap at $528.03M, most recent closing price at $10.62. PEG at 0.65. Net institutional purchases in the current quarter at 3.4M shares, which represents about 7.6% of the company's float of 44.75M shares.

6. Virtus Investment Partners, Inc. (NASDAQ:VRTS): Provides investment management products and services to individuals and institutions in the United States. Market cap at $560.96M, most recent closing price at $72.01. PEG at 0.29. Net institutional purchases in the current quarter at 499.0K shares, which represents about 6.95% of the company's float of 7.18M shares.

7. Republic Bancorp Inc. (NASDAQ:RBCAA): Operates as the holding company for Republic Bank & Trust Company and Republic Bank, which provides banking, tax refund solutions, and mortgage banking services to individuals and businesses in the United States. Market cap at $448.12M, most recent closing price at $21.38. PEG at 0.43. Net institutional purchases in the current quarter at 599.3K shares, which represents about 5.87% of the company's float of 10.21M shares.

8. Credicorp Ltd. (NYSE:BAP): Provides a range of financial products and services in Peru, Bolivia, and Panama. Market cap at $9.58B, most recent closing price at $120.61. PEG at 0.97. Net institutional purchases in the current quarter at 2.9M shares, which represents about 5.69% of the company's float of 51.01M shares.

9. Newcastle Investment Corp. (NYSE:NCT): Operates as a real estate investment and finance company that invests in and manages a portfolio consisting primarily of real estate securities. Market cap at $418.01M, most recent closing price at $6.74. PEG at 0.92. Net institutional purchases in the current quarter at 5.6M shares, which represents about 5.46% of the company's float of 102.62M shares.

10. Protective Life Corp. (NYSE:PL): And its subsidiaries engage in the production, distribution, and administration of insurance and investment products in the United States. Market cap at $2.3B, most recent closing price at $25.81. PEG at 0.74. Net institutional purchases in the current quarter at 4.2M shares, which represents about 5.27% of the company's float of 79.69M shares.

11. Bancolombia S.A. (NYSE:CIB): Provides financial products and services to individual and corporate customers in Colombia, Panama, El Salvador, Puerto Rico, the Cayman Islands, Peru, Brazil, the United States, and Spain. Market cap at $11.99B, most recent closing price at $60.88. PEG at 0.93. Net institutional purchases in the current quarter at 7.6M shares, which represents about 5.2% of the company's float of 146.26M shares.

12. Pacific Capital Bancorp (NASDAQ:PCBC): Provides a range of commercial and consumer banking services to households, professionals, and businesses primarily in the central coast of California. Market cap at $1.5B, most recent closing price at $45.60. PEG at 0.46. Net institutional purchases in the current quarter at 212.9K shares, which represents about 5.19% of the company's float of 4.10M shares.

*Institutional data sourced from Fidelity, all other data sourced from Finviz.

Source: 12 Undervalued Financials Being Bought Up By Hedge Funds