WFC - Wells Fargo

[fareastwarriors]

Wells Fargo Is the First Big Bank Simple Enough to Fail

 

 

http://dealbook.nytimes.com/2014/11/26/the-first-big-bank-simple-enough-to-fail/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Breakingviews&action=Click&pgtype=Blogs&region=Body

[meiroy]

WFC showing again why they deserve the premium.

 

Anyhow, a fantastic read:

 

http://www.thestreet.com/story/13011385/7/wells-fargo-wfc-earnings-report-q4-2014-conference-call-transcript.html

 

Wells Fargo (WFC) Earnings Report: Q4 2014 Conference Call Transcript

 

 

They cover the energy sector and what it means for their loan portfolio, the economy etc. so it's a great read even for those not invested in the company.

 

supplement: https://www08.wellsfargomedia.com/assets/pdf/about/press/2015/fourth-quarter-earnings-supplement.pdf

[sleepydragon]

can someone explain to me why wells Fargo is considered better run than BAC?

at BAC, my checking account is free, I also get 100 free trades using merrill lynch as my stock broker. ATM is everywhere.

but WFC charges 5 dollar per month for the most basic checking account, and 6.50 per trade for its "PMA" prefered customer.

why would anyone open a checking account at wells Fargo?

 

also, when I shopped for mortgage last year, they also didn't have the most competitive rates.

[peter1234]

can someone explain to me why wells Fargo is considered better run than BAC?

at BAC, my checking account is free, I also get 100 free trades using merrill lynch as my stock broker. ATM is everywhere.

but WFC charges 5 dollar per month for the most basic checking account, and 6.50 per trade for its "PMA" prefered customer.

why would anyone open a checking account at wells Fargo?

 

also, when I shopped for mortgage last year, they also didn't have the most competitive rates.

 

Invert: As an investor, would you rather own a company that charges for their products (WFC) or gives them away for free (BAC)?

;D

[sleepydragon]

thanks. yes, I would certain like to own such a business. I am just trying to understand how does WFC has such a large deposit. I don't know anyone personally who has a checking account there.

[oddballstocks]

thanks. yes, I would certain like to own such a business. I am just trying to understand how does WFC has such a large deposit. I don't know anyone personally who has a checking account there.

 

Biggest and most valuable deposits aren't retail deposits, they're business deposits.  An individual might put $250-500k in a bank at the most.  There are many businesses with millions, tens of millions, hundreds of millions and billions in cash on deposit at banks.

 

Typically a bank is better when more of their deposits are business deposits verses retail deposits.  So you might not personally know anyone who has a retail deposit, but start asking around with CFOs and Treasurers and you'll find a lot that bank with WFC.

[CorpRaider]

I've got one there.  Legacy Wachovia.  They don't charge me any fees but I don't go in there and chat with the tellers two times a week.  Although in all honesty, if the other big banks were charging them I would probably tolerate some fees as I'm familiar with their online bill pay, apps, know where convenient arms and branches are, etc...  It seems to me there are some real switching costs, not huge but real.

[valueinvesting101]

Has anyone looked at WFC warrants?

 

http://www.marketwatch.com/investing/stock/wfc.ws

 

It is trading at negative warrant premium. Gives nice leverage to play outside on WFC. WFC/WS should give return of 2.5 times of WFC going forward. You would lose out on dividend below 34 cents.

 

Given strong balance sheet of WFC in increasing interest rate environment and strong US economy, WFC should do better till warrant expiration on 10/28/18.

[Sunrider]

this is odd. I don't recall if you can exercise early but if so I'd expect this discrepancy to disappear soon (otherwise, buy warrant, exercise and sell for an immediate small profit).

 

 

Has anyone looked at WFC warrants?

 

http://www.marketwatch.com/investing/stock/wfc.ws

 

It is trading at negative warrant premium. Gives nice leverage to play outside on WFC. WFC/WS should give return of 2.5 times of WFC going forward. You would lose out on dividend below 34 cents.

 

Given strong balance sheet of WFC in increasing interest rate environment and strong US economy, WFC should do better till warrant expiration on 10/28/18.

[Wilson-TPC]

thanks. yes, I would certain like to own such a business. I am just trying to understand how does WFC has such a large deposit. I don't know anyone personally who has a checking account there.

 

Biggest and most valuable deposits aren't retail deposits, they're business deposits.  An individual might put $250-500k in a bank at the most.  There are many businesses with millions, tens of millions, hundreds of millions and billions in cash on deposit at banks.

 

Typically a bank is better when more of their deposits are business deposits verses retail deposits.  So you might not personally know anyone who has a retail deposit, but start asking around with CFOs and Treasurers and you'll find a lot that bank with WFC.

 

Well said.

[Sunrider]

Depends on the type of deposit - Basel III rules for liquidity ratios disincentives some corporate deposits because they are not "sticky".

 

thanks. yes, I would certain like to own such a business. I am just trying to understand how does WFC has such a large deposit. I don't know anyone personally who has a checking account there.

 

Biggest and most valuable deposits aren't retail deposits, they're business deposits.  An individual might put $250-500k in a bank at the most.  There are many businesses with millions, tens of millions, hundreds of millions and billions in cash on deposit at banks.

 

Typically a bank is better when more of their deposits are business deposits verses retail deposits.  So you might not personally know anyone who has a retail deposit, but start asking around with CFOs and Treasurers and you'll find a lot that bank with WFC.

 

Well said.

[Libs]

Has anyone looked at WFC warrants?

 

http://www.marketwatch.com/investing/stock/wfc.ws

 

It is trading at negative warrant premium. Gives nice leverage to play outside on WFC. WFC/WS should give return of 2.5 times of WFC going forward. You would lose out on dividend below 34 cents.

 

Given strong balance sheet of WFC in increasing interest rate environment and strong US economy, WFC should do better till warrant expiration on 10/28/18.

 

This is indeed interesting.

 

I was noodling on the impact dividends have on the strike price, and EM'd investor relations. They got right back to me with this.

 

 

https://www08.wellsfargomedia.com/downloads/pdf/invest_relations/warrant-notice.pdf

 

 

The current strike is $33.984.

 

The best guess I've seen is the strike will be around $32.78 at 2018 expiry, and one warrant will be worth 1.04 shares.

 

 

 

[valueinvesting101]

What's your estimate for dividend till 2018?

[Guest Schwab711]

thanks. yes, I would certain like to own such a business. I am just trying to understand how does WFC has such a large deposit. I don't know anyone personally who has a checking account there.

 

Biggest and most valuable deposits aren't retail deposits, they're business deposits.  An individual might put $250-500k in a bank at the most.  There are many businesses with millions, tens of millions, hundreds of millions and billions in cash on deposit at banks.

 

Typically a bank is better when more of their deposits are business deposits verses retail deposits.  So you might not personally know anyone who has a retail deposit, but start asking around with CFOs and Treasurers and you'll find a lot that bank with WFC.

 

The South in general has a much higher concentration of small businesses (doing business in the region), there are a lot of large businesses headquartered in the South because of taxes, and Wells Fargo has nearly no competitors in the region. It's a pretty fantastic situation that will probably continue to diverge.

[Libs]

What's your estimate for dividend till 2018?

 

This article has a good calulation i used:

 

http://seekingalpha.com/instablog/4581471-sa-editor-samir-patel/1880441-when-leverage-is-less-risky-the-case-for-wells-fargo-warrants

[Arden]

Last I checked the warrant is trading at 22.09 ,the strike is about 33.95, and the stock is trading at 56.38.

 

In essence, you can exercise your warrants right now and make 34 cents for each warrant (if you have a really good broker that is  :) ).

 

 

[Libs]

I finally bought these warrants today at $22.70. Made it my 3rd biggest position 8)

 

 

[fareastwarriors]

Why now?

[Libs]

Why now?

 

 

What had held me back was a fear of further interest rate declines & its NIM impact.

Obviously I could be dead wrong, but if interest rates do normalize, WFC's going to make a lot more money. Also, it looks like housing is rebounding.

 

 

 

 

 

[bennycx]

Why warrants over the common?

[racemize]

Why warrants over the common?

 

Warrants are cheap enough that you might as well buy them over common.  Same with JPM.

[Investmentacct]

I have a question about WFC warrant excercise to the people who have excercised warrants previously.

 

For 1000 warrants purchased today at market price of 22.40 ; I would pay 22400.

 

Warrant Strike is 33.95 and expiry of Oct 2018.

 

Let's say at expiry WFC trades a 70

 

With above scenario (WFC @70 at expiry) : When I want to convert 1000 warrants bought today with 22400 USD; How much money would I need to add Or come up with in total to purchase/convert to 1000 shares of WFC ?

 

Please pardon me , if this sounds very basic question.

 

TIA.

 

 

 

[fareastwarriors]

Wells Fargo & Co. Is the Earth’s Most Valuable Bank

 

Lender rides relatively simple business lines to title of bank with world’s largest market capitalization

 

http://www.wsj.com/articles/wells-fargo-co-is-the-earths-most-valuable-bank-1437538216

[benhacker]

Investmentacct... the cash you would need to pony up at expiration = (shares * strike price)... strike will be lower by the time you exercise, but that's the math.

 

[Edit: As posted below, these are cashless exercise, my math only is correct if you want to maintain the same notional exposure to WFC after exercise as before... the effective cash to exercise would just be used to buy more common after the cashless conversion of the warrants]

[Kiltacular]

I have a question about WFC warrant excercise to the people who have excercised warrants previously.

 

For 1000 warrants purchased today at market price of 22.40 ; I would pay 22400.

 

Warrant Strike is 33.95 and expiry of Oct 2018.

 

Let's say at expiry WFC trades a 70

 

With above scenario (WFC @70 at expiry) : When I want to convert 1000 warrants bought today with 22400 USD; How much money would I need to add Or come up with in total to purchase/convert to 1000 shares of WFC ?

 

Please pardon me , if this sounds very basic question.

 

TIA.

 

Keep this in mind:

 

http://www.sec.gov/Archives/edgar/data/72971/000119312510123882/d424b7.htm

 

The warrants currently are exercisable for 110,261,688 shares of our common stock, which represent approximately 2.1% of our common stock outstanding as of March 31, 2010. However, because the warrants must be exercised on a cashless basis, we will withhold from an exercising warrantholder a number of shares with a value equal to the aggregate exercise price as payment for the exercise of the warrants. The actual number of shares that could be issued upon exercise of the warrants will depend upon the market price of our common stock at the time of exercise and other factors, including the adjustment provisions described above under “Description of Warrants—Adjustments to the Warrants,” and cannot be determined at this time. Other than the warrants, Treasury does not own any of our equity securities.

and

 

Exercise of the Warrants

 

The tax consequences of the exercise of a warrant that requires a cashless exercise are not clear. We expect that the warrants will be treated for U.S. federal income tax purposes as an option to receive a variable number of shares of our common stock on exercise with no exercise price. Alternatively, the exercise of the warrants could be treated as a recapitalization. In either case, a U.S. Holder generally will not recognize gain or loss upon exercise of a warrant except with respect to any cash received in lieu of a fractional share. A U.S. Holder will have a tax basis in the shares of our common stock received upon the exercise of a warrant equal to its tax basis in the warrant, less any amount attributable to any fractional share. The initial tax basis in a warrant of a U.S. Holder is the purchase price of the warrant. If the warrant is treated as an option to receive a variable number of shares of common stock, the holding period of common stock received upon the exercise of a warrant will commence on the day the warrant is exercised. If the exercise is treated as a recapitalization, the holding period of common stock received upon the exercise of a warrant will include the U.S. Holder’s holding period for the warrant.