It's just not for the reasons you might think.
A recent report suggests Wells Fargo secretly engages in the type of Wall Street trading activities in esoteric and risky products normally dominated by the likes of JPMorgan, Goldman Sachs (GS) and Bank of America (BAC - Get Report).
The truth is Wells Fargo's trading skill is far more pedestrian and profitable than one might think: buying back its own stock.The nation's top mortgage lender may simply be effectively plying the very trading rules that its largest investor - Warren Buffett of Berkshire Hathaway (BRK.A - Get Report) - has long advocated. After disclosing a 48 million share buyback in fourth quarter earnings, Wells Fargo ended 2012 having repurchased roughly 120 million shares at an average price of $32.35. As the San Francisco-based lender petitions the Federal Reserve to increase its dividend payout above current levels, Wells Fargo investors are likely appreciative of the bank's near $4 billion in total 2012 stock buybacks, which came, on average, roughly 8% below current stock trading levels. Still, investors might want to see more by way of buybacks. Overall, Wells Fargo's share count didn't budge much in 2012 and buybacks basically offset share issuance for stock compensation. "
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts