Thursday, September 1, 2016

Recent Buy: WFC

For those that follow my Portfolio, you may have noticed that after last month's update my cash position actually became my 9th largest holding (out of 17) due to my sale of American Electric Power for a total return of 24% and my strong belief that the stock market is overvalued mostly.

9th out of 17 is relatively high for a cash holding, and so I recently wrote towards the end of July about considering Wells Fargo as one of the few remaining high quality, value purchases out there.  I still believe this to be the case and consequently acted.

Over the last week or so I had watched the stock move sideways in a tight 48.5 range (shown below) for about five trading days or so, and I knew that I had to pull the trigger if I was going to do it.

I thought the stock was definitely going to move one way or the other (to be honest I wasn't certain it'd be up!), and I missed my opportunity to get it in the high 47s earlier in August, (though I did mention in my article that it might drop into the 47s).  Anyway, in the end, I purchased it right before its most recent jump into the 50s. Here are the details of my trade:

# of Shares Purchased: 87
Purchase Price: $48.60
Yesterday's close price: $50.80

Thankfully I got in before this recent pop in share price as shown below, though I don't think it will stay as high as it is now nor do I intend to sell anytime soon, so it is basically a mute point. Nonetheless, I still think WFC is valued in the Low 60s, high 50s, giving me sufficient cushion at the stated entry price.  Add to that a 3% yield, and increasing rate probabilities and you've got a pretty good total return I think.


What do you think? Often I stay away from financials. I know many have recommended Canadian banks, which I have not acted upon yet but am definitely interested.

Thanks for reading!

Passive Income Dude

14 comments:

  1. Congratulations on WFC.

    Having cash as you 9th largest holding is a diligent move IMO.

    Keep that cash ready!!

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    1. Thanks Divi Cents! I know from your recent update that you're sitting on a ton of cash! :) That must be a great feeling and definitely let me know when you deploy that baby!

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  2. Those Canadian banks sure have me tempted but I have not pulled the trigger yet

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  3. Like the buy. I just nibbled on some WFC myself. It's been a while since I added to that name and quite frankly it's been tough deciding where to put my fresh cash. Still a decent value and attractive yield at current prices.

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    1. Keith, That's good to hear that you too think WFC is a buy. I greatly respect your investment decisions, so hearing that puts me more at ease. I think I will wait 4-5 months for the next purchase as we're seeing less and less trading volume in the market.

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  4. Been adding to this position slowly! I like the buy!

    -TDM

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    1. Thanks TDM! Good to hear. I was reviewing their Financial Statements today and there are some concerns (still learning how to do this properly), but overall it seems great. Wish I would have bought it back in 2009. :)

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  5. I bought shares of WFC recently, so happy to be a fellow shareholder! Congrats with the buy and thanks for sharing!

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    1. Thanks FerdiS. It's great to see that a lot of us are seeing value in the same places.

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  6. Great buy. WFC is the only US bank that I own. You timed the purchase well.

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    1. Thanks IH! I have to be honest on this and really did think some move was going to happen, but that I really got lucky with it going up versus down. I'm more in it for the near term anyway (3+yrs) than the specific entry price. Glad to see it moved up though!

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  7. Great buy WFC seems to be very popular with investors :)

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    1. Thanks Freezeman, It should work out alright for the near term. I am concerned a little bit about some items on its Cash Flow Statement, but I'm still learning the specifics on some of this. Will let you know if I change my thesis!

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