Headline risks can strike at any time and can hit even the best investments. Most companies have felt the pain of a news story that sent shares plunging, and when the issue results in little more than a humiliation for management, it can turn out to be an opportunity for investors. #-ad_banner-#That’s the case with my favorite bank stock, Wells Fargo (NYSE: WFC), which is the largest bank in the country by deposits and underwrites more than a third of the nation’s home loans. The bank’s focus on lending rather than asset management has helped it outperform other large banks… Read More
Headline risks can strike at any time and can hit even the best investments. Most companies have felt the pain of a news story that sent shares plunging, and when the issue results in little more than a humiliation for management, it can turn out to be an opportunity for investors. #-ad_banner-#That’s the case with my favorite bank stock, Wells Fargo (NYSE: WFC), which is the largest bank in the country by deposits and underwrites more than a third of the nation’s home loans. The bank’s focus on lending rather than asset management has helped it outperform other large banks with nearly 60% of its $1.7 trillion in balance sheet assets in consumer and business loans. News broke in early September that more than 2.1 million fake deposit and credit card accounts had been opened by employees of the bank. This was done primarily as a way to meet high quotas for cross-selling products, and only about 5% of the fake accounts generated any fee income, which totaled $2.4 million. Aggressive cross-selling of products is nothing new in banking. The problem is that Wells didn’t have the oversight structures in place to catch employees committing the fraud. — Recommended Link… Read More