Wells Fargo Shareholders Have Been Left Behind in Stock-Market Rally
January 15 2020 - 2:37PM
Dow Jones News
By Paul Vigna
Shares of Wells Fargo & Co. are back where they started
before the bank's sales-practices scandal erupted in 2016, despite
the stock's bumpy ride.
That might not seem so bad, but given the timing it is a huge
missed opportunity for shareholders.
Wells Fargo shares closed Tuesday at $49.30, just 60 cents below
their mark on Sept. 8, 2016, when the San Francisco bank was first
fined for practices that included opening deposit and credit-card
accounts without customers' knowledge.
Over the same period, shares of big-bank rivals JPMorgan Chase
& Co. and Bank of America Corp. have more than doubled, and
Citigroup Inc. has surged 71%. The S&P has jumped 52% to new
highs and its financial sector has risen 56%.
Those gains translate into market-value bumps of about $192
billion for JPMorgan, $156 billion for Bank of America and $40
billion for Citigroup. Wells Fargo's market value, meanwhile, has
declined to $209 billion from $251 billion because of significant
share repurchases.
While Warren Buffett -- the bank's largest and most famous
shareholder -- may be famously patient with his investments, less
well-capitalized investors may get antsy, especially as the fallout
from the scandal continues.
Wells Fargo said Tuesday that it took a $1.5 billion charge in
the fourth quarter to cover related costs, cutting its profit in
half.
The quarter was the first under new Chief Executive Charles
Scharf, who has the task of resolving the bank's regulatory
problems, fixing its internal culture and restoring its
reputation.
On a conference call, Mr. Scharf called Wells Fargo a
"wonderful" bank that had made terrible mistakes and hadn't done
enough to correct them.
Wells Fargo's "road to recovery was always expected to be a
rocky one," said BMO Capital Markets analyst James Fotheringham.
This week, "management made it clear that it would also be
longer."
(END) Dow Jones Newswires
January 15, 2020 14:22 ET (19:22 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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