New York- What a week it was for the majority of the ten largest banks in America. It was a week of profit, it was a week of more profit; it was the tale of Wall Street irrationality. It all started on Monday when Citigroup, the nations third largest lender posted $2.1 billion of profit and topped estimates. Everything was going great; the sun was shining; things were looking up and banking stocks roared. Then on Tuesday, Bank of America the nations largest bank came up to bat, BAC said they had earned earned $3.1 billion and everyone jumped for joy. But wait just a minute said investors, why does their income statement show a 7.3 billion dollar loss? What is happening with the foreclosure scandal? Why is my tea cold? It must be Bank of America's fault and this quiet optimism soon faded into the night like a distant dream. Wells Fargo and the other banks plummeted as BAC said sorry guys.
San Francisco's own Wells Fargo was up next, they said thanks BAC but we'll take it from here and "we'll go far," as they announced a record $3.34 billion of profit. Investors remained tepid at first, as they were ready to crush the bank stocks for a second straight day. Wells Fargo sunk 2% in the pre-market, but then they said what the heck this is a great stock, lets buy it and the stock roared 5%. Then it was U.S. Bancorp's turn, the nations 5th largest lender reported a profit of $871 million but investors did not know what to do, and kept the stock flat on the day. Today they decided it was actually a great report and the stock rose 2.3%.
PNC, Sun Trust and BB&T reported today. PNC soared as the company recorded a near record profit. Investors were relieved when Sun Trust Banks reported their first profit in over a year and BB&T shares sunk when they announced $210 million of profit.
And that was the banking week in America, completely illogical, irrational, but very enjoyable to watch from the outside.
Showing posts with label Wells Fargo. Show all posts
Showing posts with label Wells Fargo. Show all posts
Saturday, October 23, 2010
Wednesday, October 20, 2010
Will Earnings Fair Well? (NYSE: WFC)
Wells Fargo (NYSE: WFC) is set to report earnings tomorrow morning. Analyst estimates range from $0.43 to $0.65 a share with the average being at $0.55 per share. Revenue is expected to be $20.95 billion. Wells Fargo is the 4th largest bank in the United States when ranked by assets. The company provides retail, commercial and corporate banking services to customers worldwide.
To read Edwards' full report click here.
Tuesday, October 19, 2010
Will Wells Fargo Stock Go Far ?(NYSE: WFC)
NEW YORK- The San Francisco based bank which is the nations 4th largest lender is set to report their corporate earnings tomorrow. Wells Fargo has had six straight profitable quarters as the bank has continued to handle the recession better than the other major banks. The current consensus estimate for Wells Fargo's Q3 is 55 cents a share or $2.88 billion. Bank earnings are often hard to guess due to a large amount of the earnings coming from non interest income activities.
To see our full Wells Fargo report Click Here
To see our full Wells Fargo report Click Here
Monday, October 18, 2010
Wells Fargo Soars on Upgrade
SAN FRANCISCO- Wells Fargo roared higher and was the second best performer of the major U.S. banks only behind Citigroup . Wells Fargo was upgraded by The Markets Are Open on Friday after the stock sold off by nearly 5%. The company will report its Q3 results on October 20th. Investors will be looking for strong results from the bank as well as more clarification regarding the foreclosure scandal. The foreclosure scandal has been sweeping the nation as it has been determined that workers of bank companies foreclosed on homes without properly reviewing necessary documents. Analysts argue that the banks are open to a liability for this lack of due diligence.
To see the full Wells Fargo Report click here
To see the full Wells Fargo Report click here
Sunday, October 17, 2010
The Warren Buffett Type (NYSE:WFC) Bank (NYSE:PNC) (NYSE:BRK.A)
Warren Buffett the legendary investor from Omaha Nebraska known to the investing community as the "Oracle of Omaha" for his ability to predict the future. Buffett has always been heavily invested in financial stocks since the future of money is easier to be guessed than the future of computer software. Buffett currently owns 39.3% of his portfolio in financial stocks and his company runs one of the largest insurance divisions in the world. Buffett owns 320 million shares or 6% of the outstanding stock in Wells Fargo the fourth largest financial institution in the United States.
Despite having such a large weighting towards financials Buffett is very particular about which banks he will invest in. This is likely why the the bank Buffet is heavily invested in, Wells Fargo is down very little in the last 2 years while many other banks such as Bank of America and Citigroup have lost over 70% of their value. In fact earlier this year Wells Fargo was more valuable than it had been two years before. This shows the quality that Buffett looks for in a financial institution. In order to find a Buffett like bank lets examine some of the reasons why he bought Wells Fargo in 1990.
"With Wells Fargo, we think we have obtained the best managers in the business, Carl Reichardt and Paul Hazen... Our purchases of Wells Fargo in 1990 were helped by a chaotic market in bank stocks... Wells Fargo is big - it has $56 billion in assets - and has been earning more than 20% on equity (ROE) and 1.25% on assets (ROA)."
The first priority of Warren Buffett is to choose a bank with the best managers and best culture. The next factor he looks for is its ROA and ROE. Wells Fargo has consistently earned more than 1.5% on assets and 20% over the last 20 years. PNC Financial would also be a Buffett like investment since it has consistently had an ROA above 1.5% and ROE above 20% over the last ten years. Buffett also looks for safety and just like Wells Fargo, PNC is down very little since the beginning of the financial crisis.
The second thing Buffett looks for is the amount of risk a bank has. He has stated "Because leverage of 20:1 magnifies the effects of managerial strengths and weaknesses, we have no interest in purchasing shares of a poorly-managed bank at a "cheap" price. Instead, our only interest is in buying into well-managed banks at fair prices."
Buffett mentions that because of the substantial leverage some banks use he would not be interested in investing in a bank even if was at a fair price because leverage could be to high. This can be seen in Deutsche Bank which has leverage of almost 65 to 1. The leverage is so high it has recently asked shareholders to undertake a capital raising initiative. Even with this capital offering Deutsche Bank will still use more leverage than the average bank. When this amount of leverage is used a mistake by management will be magnified. Most of the European Banks have substantially more leverage than that of the U.S. meaning Buffett would likely not be interested in them despite their low prices.
Most of the American banks use substantially less leverage today than the 20 to 1 mentioned by Buffett that the banks typically used in 1990. Currently, PNC has leverage of 11 to 1 and Wells Fargo leverage is 13 to 1. This means these banks are extremely safe and well capitalized. These are two investments Warren Buffett would make if he were to invest in a bank today.
Despite having such a large weighting towards financials Buffett is very particular about which banks he will invest in. This is likely why the the bank Buffet is heavily invested in, Wells Fargo is down very little in the last 2 years while many other banks such as Bank of America and Citigroup have lost over 70% of their value. In fact earlier this year Wells Fargo was more valuable than it had been two years before. This shows the quality that Buffett looks for in a financial institution. In order to find a Buffett like bank lets examine some of the reasons why he bought Wells Fargo in 1990.
"With Wells Fargo, we think we have obtained the best managers in the business, Carl Reichardt and Paul Hazen... Our purchases of Wells Fargo in 1990 were helped by a chaotic market in bank stocks... Wells Fargo is big - it has $56 billion in assets - and has been earning more than 20% on equity (ROE) and 1.25% on assets (ROA)."
The first priority of Warren Buffett is to choose a bank with the best managers and best culture. The next factor he looks for is its ROA and ROE. Wells Fargo has consistently earned more than 1.5% on assets and 20% over the last 20 years. PNC Financial would also be a Buffett like investment since it has consistently had an ROA above 1.5% and ROE above 20% over the last ten years. Buffett also looks for safety and just like Wells Fargo, PNC is down very little since the beginning of the financial crisis.
The second thing Buffett looks for is the amount of risk a bank has. He has stated "Because leverage of 20:1 magnifies the effects of managerial strengths and weaknesses, we have no interest in purchasing shares of a poorly-managed bank at a "cheap" price. Instead, our only interest is in buying into well-managed banks at fair prices."
Buffett mentions that because of the substantial leverage some banks use he would not be interested in investing in a bank even if was at a fair price because leverage could be to high. This can be seen in Deutsche Bank which has leverage of almost 65 to 1. The leverage is so high it has recently asked shareholders to undertake a capital raising initiative. Even with this capital offering Deutsche Bank will still use more leverage than the average bank. When this amount of leverage is used a mistake by management will be magnified. Most of the European Banks have substantially more leverage than that of the U.S. meaning Buffett would likely not be interested in them despite their low prices.
Most of the American banks use substantially less leverage today than the 20 to 1 mentioned by Buffett that the banks typically used in 1990. Currently, PNC has leverage of 11 to 1 and Wells Fargo leverage is 13 to 1. This means these banks are extremely safe and well capitalized. These are two investments Warren Buffett would make if he were to invest in a bank today.
Saturday, October 16, 2010
Banking (NYSE:WFC) on America (NYSE:BAC) (NYSE:C)
Bank of America Corporation (NYSE:BAC) hit a fresh 52-week low on Friday as worried that the foreclosure crisis may eat into BAC profit. The scandal involves foreclosures on houses by the banks without the necessary documentation and the foreclosure of houses using robo-signers which is when workers involved in forclosures indicate the documentation is present when it is not. J.P Morgan the second largest bank in the U.S. already took a charge in their third quarter report relating to the mortgage foreclosure scandal. Despite this charge JPM posted $4.4 billion of profit. Investors are afraid that Wells Fargo will have to report a similar charge. It has been reported Xee Moua a vice president of loan documentation for Wells Fargo, the second-largest US mortgage servicer, had pushed through 500 foreclosures a day. The financial sector has continued to be beaten down since mid April. The stock reached a low of $11.74 today, valuing the company's market capitalization close to Citigroup levels. Citigroup currently has a market capitalization of only $6 billion dollars less than BAC despite having less assets and a lower book value.
To see the BAC report Click Here
To see the Wells Fargo Report Click Here
Friday, October 15, 2010
Together We'll Forge Documents (NYSE:WFC) (NYSE:JPM)
Shares of Wells Fargo plunged over 4% on worries of the foreclosure scandal which is brewing in the United States. The scandal involves foreclosures on houses by the banks without the necessary documentation and the foreclosure of houses using robo-signers which is when workers involved in forclosures indicate the documentation is present when it is not. J.P Morgan the second largest bank in the U.S. already took a charge in their third quarter report relating to the mortgage foreclosure scandal. Despite this charge JPM posted $4.4 billion of profit. Investors are afraid that Wells Fargo will have to report a similar charge. It has been reported Xee Moua a vice president of loan documentation for Wells Fargo, the second-largest US mortgage servicer, had pushed through 500 foreclosures a day.JPM is currently looking into improper practice on the foreclosure of 115,000 homes. The CEO of The Markets Are Open Allan Edwards said "even if triple the amount of houses looked at and write them all off to zero you still get an amount lower than the current market capitalization decrease in J.P. Morgan stock." Edwards is referring to the fact JPM and WFC stocks have lost over 10 billion in market cap which is probably 10 to 20 times more than what the incident will cost.
These events prove that the market often overvalues risk which is why stocks reach unreasonably low levels as is what happened in 2009.
Sellers Bank on America's (NYSE:BAC) Weak Stomach (NYSE:WFC)
New York- Bank of America and Wells Fargo stock has continued to drop on foreclosure worries. The scandal involves foreclosures on houses by the banks without the necessary documentation and the foreclosure of houses using robo-signers which is when workers involved in forclosures indicate the documentation is present when it is not. It has been reported Xee Moua a vice president of loan documentation for Wells Fargo, the second-largest US mortgage servicer, had pushed through 500 foreclosures a day.
Bank of America Stock is currently down 1.7% and Wells Fargo stock is down another 1.5% after both stocks dropped 5% yesterday. To put this into market capitalization perspective Wells Fargo has lost 7.7 billion dollars and Bank of America has lost 9 billion dollars of value. These numbers appear to be disproportionate to the amount J.P. Morgan has set aside for future claims regarding the foreclosure amounts.
It just proves time and time again when anything is uncertain the Wall Street traders short or sell even when it doesn't make any logical sense.
Bank of America Stock is currently down 1.7% and Wells Fargo stock is down another 1.5% after both stocks dropped 5% yesterday. To put this into market capitalization perspective Wells Fargo has lost 7.7 billion dollars and Bank of America has lost 9 billion dollars of value. These numbers appear to be disproportionate to the amount J.P. Morgan has set aside for future claims regarding the foreclosure amounts.
It just proves time and time again when anything is uncertain the Wall Street traders short or sell even when it doesn't make any logical sense.
Thursday, October 14, 2010
Well Worth The Wait? (NYSE: WFC)
New York- Wells Fargo stock dropped 4.22% on the day as investors were concerned about the banks involvement in "robo-gate." The scandal involves foreclosures on houses by the banks without the necessary documentation and the foreclosure of houses using robo-signers which is when workers involved in forclosures indicate the documentation is present when it is not. It has been reported Xee Moua a vice president of loan documentation for Wells Fargo, the second-largest US mortgage servicer, had pushed through 500 foreclosures a day.Some of the banks are having trouble of identifying the owner of the actual mortgages. This was caused by the securitization of the mortgages industry which also led to the financial crisis in 2008. The securatization is the repackaging of mortgages into smaller pieces and then selling them like bonds or stocks to investors. The issue would be if banks have submitted forged documents in order to get the foreclosure processed and if the banks have the documents necessary to foreclose on future loans. All of these problems are rectified if the banks prove they own the mortgage.
To see the full Wells Fargo report Click Here
Together We'll Forge (NYSE:WFC)
Shares of Wells Fargo plunged 5% on worries of the foreclosure scandal which is brewing in the United States. The scandal involves foreclosures on houses by the banks without the necessary documentation and the foreclosure of houses using robo-signers which is when workers involved in forclosures indicate the documentation is present when it is not. J.P Morgan the second largest bank in the U.S. already took a charge in their third quarter report relating to the mortgage foreclosure scandal. Despite this charge JPM posted $4.4 billion of profit. Investors are afraid that Wells Fargo will have to report a similar charge. It has been reported Xee Moua a vice president of loan documentation for Wells Fargo, the second-largest US mortgage servicer, had pushed through 500 foreclosures a day.Bank of America, JP Morgan and GMAC have recently stopped foreclosures after discovering the problem related to these loose foreclosure practices. In a sworn deposition Xee Mou admitted that she did not verify the principal and interest the bank claimed the borrower owed. She only checked whether the name was accurate.
JP Morgan's chief executive, Jamie Dimon said that banks could face penalties relating to this scandal but he added "We don't think there are cases where people have been evicted … where they shouldn't have been."
Wells Fargo shares are down over 5% as we head into the final hour of trading.
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