Added Wells Fargo to the Fat Pitch Financials Portfolio

I added a half position in Wells Fargo & Company (WFC) today to the Fat Pitch Financials Portfolio. In my Marketocracy account that tracks this portfolio, my order for 1,400 shares of WFC at an average price of $34.85 was filled just before the market closed today.

I based my decision in part on the news that Warren Buffett had bought shares of Wells Fargo for his personal accountas well as for Berkshire Hathaway (BRKa). I trust Mr. Buffett’s judgement of Wells Fargo’s management and financial health and believe his personal purchase of this stock sends a strong signal of good an opportunity this is.

I also gained great insight into the culture and operations at Wells Fargo from conversions I had with VIN member Nick several months ago. Nick used to work for Wells Fargo until he switched careers just a few months ago. Meeting great people like Nick and networking with them, is just one of the many benefits I’ve experience by creating Value Investing News.

I only wish I could get Wells Fargo at a cheaper price. It is likely that Mr. Buffett picked up shares below 30. 

After the market closed today, I also realized that I probably could have bought shares of Wachovia (WB) instead of WFC in order to eventually get shares of WFC at a discount due to the merger arbitrage discount associated with stock swap offer. As you probably heard, Wells Fargo agreed to buy Wachoviatoday, over the protest of Citigroup (C). Wachovia shareholders will receive 0.1991 shares of Wells Fargo for every share of Wachovia stock they own if the deal goes through. If Mr. Market goes crazy again, I might fill my position in Wells Fargo by buying Wachovia shares if the spread remains. Apparently, William Ackman already owns shares of Wachovia and he will be speak about Pershing Square’s investment in Wachovia at next week’s Value Investing Congress. I’ll be sure to share with you what he says.

Disclosure: I own shares of Wells Fargo & Company. No other stocks mentioned are owned.

6 thoughts on “Added Wells Fargo to the Fat Pitch Financials Portfolio

  • October 4, 2008 at 12:20 am

    Buffet did indeed purchase WFC for his personal account when it was trading below 30. He mentioned this fact in the following interview.

  • October 4, 2008 at 12:27 pm

    He bought shares in the low 20s is what he’s mentioned, which basically means he bought them mid-July.

  • October 4, 2008 at 10:53 pm

    With the enormous universe of stocks out there, why would you purchase this at a price you don’t like? There is very little downside protection at this point. It has a sizable premium to book value and earnings. I had a big position but I cut it back 75% at $38. Certainly in the long rung, it has amazing prospects, and the Wachovia deal is icing on the cake, but there seem to be better places to put capital to work.

  • October 5, 2008 at 12:13 am

    George, what do you think of this big spread on the $7 WB buyout? It made it up to 7.05 Fri then sold off to 5.25 then ended the day just over 6 ??? My theory is it sold off with the rest of the market..I don’t know. It seems more likely they will get a better bid than anything else here. I mean how could the shareholders not take this if they let them vote? The market should be pricing the shares closer to $7. worst case it seems they reject and get a higher bid or is the gov going to not allow the Wells deal?

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