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 Wells Fargo Stock Price Drops 2/18/09 View next topic
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Aristotle
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Joined: 05 Dec 2007
Posts: 594
Location: On a sand dune, sipping a cold soda

Wells Fargo Stock Price Drops 2/18/09
PostPosted: Wed Feb 18, 2009 10:24 pm Reply with quoteBack to top

At the close of the market today, CNBC was reporting a sharp drop in WSE's price at the end of the day.

I could not find charts on the internet which matched CNBC's.

There was speculation on CNBC that securities investors felt that Wells Fargo's investment/operating losses are much greater than anyone previously expected. It was unclear whether those "surprise" losses are allegedly in Wells Fargo or Wachovia's assets.

In reporting the story at 5:25PM Eastern time, CNBC's commentators said they had no details about the cause of investors concern, and they are trying to figure out what information investors are basing their decision making on.

I found a story a few hours earlier, by Dow Jones Newswires, which said:

"Options Traders Take Bearish Positions In Wells Fargo >WFC
3:18 pm ET 02/18/2009 - Dow Jones


By Tennille Tracy
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Options traders continue to pursue bearish contracts in Wells Fargo & Co. (WFC) after shares in the San Francisco bank dipped to a new 52-week low. Trading in Wells Fargo dominated much of Wednesday's session, with investors picking up 117,000 calls that allow them to buy the bank's stock and 367,00 puts that allow them to sell it, according to Trade Alert. A lot of the action is taking place around April puts that convey the right to sell Wells Fargo stock for $12.50. Priced at $2.90, the contracts make money if Wells Fargo dips below $9.60 before April 17."

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As Yogi Berra said "It's like deja vu all over again."
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truehollywood
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Joined: 24 Jan 2008
Posts: 755
Location: CA

Re: Wells Fargo Stock Price Drops 2/18/09
PostPosted: Wed Feb 18, 2009 10:43 pm Reply with quoteBack to top

There's a rumor (only a rumor), that the fed is talking to them about another large acquisition which negates Stumpf's talk of not taking any more bailout money. If they acquire a large company, say, like Citi... or Chase then they will have to take the money. They won't have a choice. They are also getting ready to sell more servicing.
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Aristotle
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Joined: 05 Dec 2007
Posts: 594
Location: On a sand dune, sipping a cold soda

Contaminating Healthy Banks With Bad Banks
PostPosted: Thu Feb 19, 2009 12:38 am Reply with quoteBack to top

I hope Wells Fargo's management ignores the Fed, if the Fed is asking them to take ownership of another sickly bank.

When I was a kid, I knew Mr. Z, who was the bank manager of my friendly neighborhood savings bank. I remember when he showed me "the button" the teller would step on to set off the robbery alarm. As a kid I got a real kick out of that. By the time I graduated from law school, Mr. Z had worked his way up to the job of President of Buffalo Savings.

Mr. Z ran an impeccable banking operation. FSLIC's staff admired him, and kept coming to him asking that Buffalo Savings take over failing S&Ls throughout the north east. Finally, Buffalo Savings had swallowed too much garbage and failed when the accounting rules for goodwill were changed. Mr. Z lost his job.

Mr. Z's story is a lesson to be followed by bank executives throughout the country.

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truehollywood
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Re: Wells Fargo Stock Price Drops 2/18/09
PostPosted: Thu Feb 19, 2009 1:48 pm Reply with quoteBack to top

Ari, I agree with you. I think that the banks are stuck between the call for "Nationalization of banks, ie fannie and freddie" or taking over sickly banks. Stumpf wants the government out of his business, but he wants to keep his job. Everyone has seen want happened at AIG, FNMA and FHLMC as far as upper management is concerned. It scares them.
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Aaron
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Joined: 24 Jan 2007
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Re: Wells Fargo Stock Price Drops 2/18/09
PostPosted: Mon Feb 23, 2009 7:36 am Reply with quoteBack to top

I reckon the only difference between Wells and a number of major collapsed banks is Wells held most of its toxic waste, so it hasn't had immediate mark-to-market concerns. But the ailing portfolios are starting to chip away at its revenue. Ultimately they won't be able to fool the market: loans market at peak or near-peak valuations will not earn cash flow implied by valuations 30-50% higher than the reality.
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