Wells Fargo CEO Stumpf Addresses Company's Charge Offs

Okay, let's just forget Cramer uses my Wells Fargo (WFC) in 1990 analogy from 2 weeks ago in the interview. What is more important is what Stumpf has to say.

There is a commercial break in the middle of the video so do not tune out, there is more after.

Cramer actually said, "I like to challenge my own thesis when I am bullish on a stock because these are just pieces of paper." Doesn't that go against everything you are ever taught about investing and buying "pieces of great companies"?

Anyway, on to Stumpf.

Stumpf addresses, and I think does a fantastic job refuting, Meridith Whitney's take on the company that it was playing with loan write offs to increase earnings. Stumpf points out that they took a $3 billion charge in Q2 and only $1.5 billion was write-downs ($1.5 billion increased reserves). Had they not changed the way they account for charge-offs, the difference would have been $254 million and covered in the reserves they took.

Best line. "We didn't miss every bad party but we missed most of them".

Video:

Wells Fargo's (WFC) largest shareholder is Warren Buffett's Berkshire Hathaway (BRK.A).

Disclosure ("none" means no position): Long WFC, None.

Comments

[paulmars:]

Wells Fargo is at ground zero of the consumer and mortgage crisis, with 10x leverage in all kinds of now very risky loans that they would not make today and would love to take back.
The odds are this stock will be under pressure for years to come, as they have to continue to do and song and dance to explain everything away, like he is stooping to do on Cramer's tawdry show.
What's the upside in this stock versus the downside, given a short to intermediate time horizon?
Not good. Buffett's halo is slipping...

2008 Aug 20 04:59 PM

[Arctec:]

Wells Fargo was one of the top 10 Subprime Lenders.

2008 Aug 21 10:21 PM