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Why Wells Fargo Is a Great Buy

Great article Amit, and don't forget also that your $ per share estimate is very conservative because WFC has to use up billions of tax loss credits they got from the special IRS ruling just before the Wachovia merger was announced (actually the reason FOR the merger). Prob worth about another $15 billion net whenever they want to take it. They won't be paying 35% for a looong time.

Financial-Dip Buyers Forget To Ask What's Next

Want to make a comment on WFC - the change in charge off time from 120 to 180 days did NOT affect their posted net. This was all included in the $3 bn provision for the quarter.

To quote the press release:

"As previously announced, the Home Equity charge-off policy changed in the second quarter from 120 days to no more than 180 days to provide more time to work with customers to solve their credit problems and keep them in their homes. The Company has helped nearly 900 customers, and approximately $90 million of Home Equity loans have been modified due to this change. The policy change had the effect of deferring an estimated $265 million of charge-offs from the second quarter, but did not reduce provision expense in the second quarter since this loss content was included in the $1.5 billion credit reserve build."

As Morningstar said, banks that are strong are gaining market share, increasing margins, and "printing money". Losses are going to be high but the incremental gains are huge.