Thoughts on the banks
Wells Fargo set off a rally in bank stocks and the broader market when it announced an earning surprise.
No complaints on my end, obviously. I have open picks on Wells and on two of its peers, US Bancorp and BB&T. I personally own USB.
All else equal, I think Wells is the best run bank in the US. However, I shied away from purchasing it, and instead bought USB around $14. Wells bought a lot of trouble when it bought Wachovia, which came with an investment bank. As a consequence, I think Wells is riskier than USB and BBT, which are both vanilla banks. Of the two, I think USB is a better investment because its larger. However, BBT is still paying out a sizeable dividend. Both have loaned conservatively and I don't expect either to see great writedowns going forward. In fact, Wells' loan book is also conservative - the only thing that turns me off Wells is their new investment bank and other liabilities they acquired from Wachovia.