Industry-Banks

Wells Fargo and the Incredible Predictability of Deposit Growth

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“In the end, banking is a very good business unless you do dumb things.” – Warren Buffett Buffett has been investing in bank stocks since the 1950’s, and I think one of the things he probably likes most about banking is the predictability of deposit growth. As he says, if you don’t do dumb things—if you stick to taking in deposits and lending them out, you’ll mint money. All the money center banks reported earnings a couple weeks ago. In […]

Case Studies

Importance of ROIC Part 5: A Glance at the Last 42 Years of Wells Fargo

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“Experience, however, indicates that the best business returns are usually achieved by companies that are doing something quite similar today to what they were doing five or ten years ago… a business that constantly encounters major change also encounters many chances for major error. Furthermore, economic terrain that is forever shifting violently is ground on which it is difficult to build a fortress-like business franchise. Such a franchise is usually the key to sustained high returns.”   –Warren Buffett, 1992 Shareholder […]

Case Studies

Importance of ROIC Part 2: Compounders and Cheap Stocks

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This is part 2 of my follow up thoughts on compounders, cheap stocks, and the importance of returns on capital. Part 1 is here. Also, some previous posts before that are relevant to this post as well: Thoughts on Return on Capital and Greenblatt’s Magic Formula Part 1 Thoughts on Return on Capital and Greenblatt’s Magic Formula Part 2 Buffett Shareholder Letter High ROE Wells Fargo vs. Small Community Banks A Few Thoughts on Buffett and Great Banks To recap last […]

Investment Philosophy

Importance of ROIC Part 1: Compounders and Cheap Stocks

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A while back, I posted a couple articles on return on invested capital (ROIC) along with some comments on Joel Greenblatt’s Magic Formula. These posts attracted a lot of comments and email questions, and so I wanted to post some more thoughts on the topic of compounding generally, and maybe ROIC more specifically. Here are some links to posts that are somewhat related to this topic: Thoughts on Return on Capital and Greenblatt’s Magic Formula Part 1 Thoughts on Return […]

Case Studies

A Few Thoughts on Buffett and Great Banks

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I wrote a post about screening for quality bank stocks and another one here about Wells Fargo vs Cheap Community Banks and thought I’d post on some other comments I have here. Some of these thought might sound contradictory (everyone wants to separate stocks into categories based on quality/earnings and cheapness/assets). It’s not black and white, and all we’re really trying to do is figure out what something is worth and pay less for it. As Alice Schroeder has said, […]

Case Studies

Wells Fargo vs. Small Community Banks

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Charlie Munger once said that he compares every possible investment to Wells Fargo… Why buy company X if it’s not as good/cheap as WFC?  For weeks I’ve been slowly and steadily working my way through hundreds of small community bank stock filings looking for bargains. A good friend of mine lately has been the trusty old FDIC website where you can find current/historical financials on banks to your heart’s content… But after a few more hours of sifting through Call Reports […]

Investment Ideas & Company Research

Couple Thoughts on Wells Fargo (WFC)

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I was reading one of my favorite blogs that I just only recently discovered called Brooklyn Investor. He does a great job at doing thorough analysis on companies, and some of the posts are good case studies to learn from. He had a couple posts last week on Wells Fargo (WFC), which I found interesting. Of course, WFC is one of the top 4 largest banks in the country, and with a market cap just shy of $200 Billion, it’s […]