Some thoughts on the “candy” Wells Fargo (WFC) may be after..
Reuters Reports:
The chairman of the No. 2 U.S. mortgage bank said on Wednesday that his company was “buying with both hands” and, given the distressed state of financial assets, he felt “like a kid in a candy store.”
Wells Fargo (WFC) Chairman Richard Kovacevich declined to comment to Reuters at a conference in Beverly Hills, California, on whether the company is interested in buying Washington Mutual Inc (WM) or Wachovia Corp (WB) but indicated he was interested in buying other banks in distress.
“Wells Fargo often buys fixer uppers,” companies that have had some hard knocks and can be rehabilitated in two or three years, he said in a speech at the Association of Corporate Growth 2008 conference. “Given the financial conditions today I feel like a kid in a candy store. There is a lot out there today.”
“We are buying with both hands right now, as we have done for the past year,” Kovacevich said, describing himself as a “confessed serial acquirer.”
Well, we know they are buying insurance operations around the country. Banking? CEO John Stumpf recently said a “large transformational deal was unlikely”.
Does that rule out WB or WM? I think it it means they pick up branches, rather than the whole thing. Or, it means maybe that as Wells looks at the books of the most mentioned two banks, things are not really as bad there as people currently think vs the price they can be had at.
I would be very surprised at an outright buy…..pieces? Yes.
Disclosure (“none” means no position):Long WB,WFC, none
Visit the ValuePlays Bookstore for Great Investing Books