Oddly enough, Wells Fargo is only one of only 10 companies in my database with market cap over $100bn and trading at under 10 times earnings. Cit is another, and AT&T.


Sounds like a hint at what the secret big financial acquisition might be: Wells or Citi.

Ok, let's say it's one of these 2 - which is more likely?

As for Wells, ignoring the last tiny sliver sold in Q1 2022, the prior top-5 position was sold slowly from Q2 2017 to Q1 2019, then a bit fast in Q3/4 2019, and finally more quickly from Q2 2020 to Q1 2021. Here are all the sales (data from Dataroma)

2017
Q2 11.7m
Q3 3.8m
Q4 6.0m
2018
Q1 1.7m
Q2 4.5m
Q3 9.7m
Q4 15.6
2019
Q1 17.0m
Q2 0
Q3 31.4m
Q4 55.2m
2020
Q1 0
Q2 85.6m
Q3 110.2m
Q4 75.0m
2021
Q1 51.7
...
2022
Q1 0.7m and it was gone.

Buffett fans like myself will not be happy to see that the concentrated selling in Q2-3-4 of 2020 almost perfectly nailed the worst prices for Wells in a decade, and that the price has more than doubled since then, substantialy better than ... ahem... BAC or Citi. No matter, water under the bridge, and it would not be like Buffett to prevent himself from buying back a stake in Wells even if it would just emphasize what a mistake it was to sell it in the first place.

So does the comparison go now, between WFC, BAC and C? (And I threw in BAC)


WFC C BAC
P/B: 1.1 0.56 1.0
P/E: 10.8 13.6 11.1
ROE: 10.3% 4.6% 9.4%
ROA: 1.00% 0.39% 0.85%

I would vote for none of the above; I think all of them are stuck with long treasuries way under acquisition cost, and will be unprofitable for a long time. But I guess if I had to guess between WFC and C, as a new acquisition, my guess would be Wells. But I would be curious to hear the opinions of anyone who knows these banks better than I do (and that's a low bar.)

dtb