At first, Wells Fargo's positive pre-announcement of first-quarter earnings was greeted with surprise and pleasure. The San Francisco–based bank's stock jumped as much as 34 percent in intraday trading, igniting a marketwide rally. But as the day went on and the surprise wore off, some started to feel skeptical, and even suspicious.
Below, a smattering of opinions.
8:39 a.m. The Street.com's Doug Kass took a long position in Berkshire Hathaway (which holds loads of Wells Fargo stock) based on Wells Fargo's performance this morning. "I expect the world's stock markets to advance smartly from current levels (and for financial stocks like Wells Fargo to lead the way), the value of the company's investment portfolio and its intrinsic value will likely be much higher by midyear." [Street]
10:12ish Commenters on the Times DealBook were immediately dubious. "I don’t buy into these numbers: no way." said one. "In the Old West (if we believe the movie version) the masked men robbed from Wells Fargo stage coaches, but I think today the masked men are running Wells Fargo," said another. [DealBook/NYT]
3:18 p.m. The Journal puts up a story headlined "Is All Really Well For Wells?" which observes that although Wells sure "served up a sucker punch to short-sellers" today, their estimate didn't necessarily include the impact of charges relating to December's Wachovia takeover. ("We have put a lot of their losses behind us," chief financial officer Howard Atkins said in an interview.) "Fox-Pitt Kelton analyst Andrew Marquardt was estimating earnings before merger expenses of 45 cents per share. On that basis, Wells still outperformed — just not as dramatically." [WSJ]
4 p.m. Our Friend, the Vulture Investor, pipes up: "They are not taking big enough loss provisions on their loans thereby hoping the economy will bail them out.... Their 2nd lien portfolio alone should be written down at least 30 billion, not to mention their other 700 billion of loans they currently have at par. The thing is people just want to believe things are getting better and if the banks say things are better then they must be better. We have a couple of sayings here, 'Management lies all the time,' and 'Never underestimate the stupidity of the market.'"