Here Is How Shares of Troubled Wells Fargo Got Their Groove Back

Tim Sloan, who took over as chief executive at scandal-ridden Wells Fargo (WFC) , after John Stump's unceremonious departure may be silently winning Wall Street's badge of approval.

Wells Fargo has actually become one of the best growth opportunities.

Shares of this storied financial institution, of which Warren E. Buffett hasn't sold a single share after the fake account scandal erupted in September, are up 15%-plus since Sloan took charge of affairs.

It is evident that Wells Fargo has managed to garner investor acceptance. Consider its close rivals: Citigroup is up about 9% in the past month; shares of JPMorgan Chase, the biggest lender in terms of market value, are up about 13%; and U.S. Bancorp, the fifth-largest national commercial bank, has seen a nearly 12% jump.

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There are three factors that explain why the bank is doing well.

First, is Buffett's steadfast support. This stands in sharp contrast to star fund managers such as Will Danoff of Fidelity's Contrafund who trimmed his stake.

Buffett's Berkshire Hathaway is Wells Fargo's biggest shareholder. He personally owns 2 million shares.

The Oracle of Omaha, who considers Wells Fargo to be an "incredible institution," has suggested that Tim Sloan is the right man for the job.

The second factor helping Wells Fargo is that Sloan has ushered in an era of transformation at a fast clip. Stumpf was known for driving an aggressive incentivized structure, compelling employees to commit large-scale fraud.

But Sloan is changing the way that the bank handles whistle blower complaints. His "conversations tour" is seen as an attempt at restoring employee morale after the bank's recent scandal.

Further, the stock has already survived the relentless wave of negativity, such as fines, suspension of business, litigation losses and potentially an S&P credit downgrade. The stock is pricing in these elements and finally coming up for air.

Finally, financial stocks especially banks, big and small, have been pushed ahead by Donald Trump's shocking victory in the presidential election.

The prospect of higher interest rates and lighter regulation is dwarfing anxieties over new U.S. trade strategies.

Previously, bank stocks were overwhelmed by Dodd-Frank regulations and an environment unfavorable for supporting a sturdier level of economic development. That could change soon.

Aside from Wells Fargo, shares of Bank of America, Comerica and PNC Bank, among others, have risen over the past eight to 10 days.

Most importantly, Wells Fargo has found renewed investor confidence, with traders ready to look beyond the account-opening scandal.

After exceeding third-quarter estimates, Wells Fargo look it will keep surging as Sloan unleashes new strategic plans.

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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.

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