Wells Fargo (WFC)

Challenge is its very traditional lending business. Cap on balance sheet has been removed, and shares have improved somewhat. Trouble is, peers are having really great results.

You have to rank the US banks, and this one is not his favourite. Execution issues.

They report Tuesday. Not an earnings story, but a long-term turnaround. Led by a good CEO who is buying back a lot of shares.

There's worry that AI could disrupt banking. They have a low-cost deposit base and cross-sell into other areas. Performance is good and they have resolved past problems.

It just reported a top and bottom line miss: 4.5% sales growth, 13% earnings growth and a 64% efficiency ratio in Q4 YOY. The earnings shortfall came from higher severance expenses. The business is doing well, but not as well as he and Wall Street were hoping. Still believes in this long-term, but took some shares off the table yesterday. Is still more downside.

It reports Wednesday. The CEO has enlarged operations to a full corporate and individual bank, including M&A operations. And they are constantly paring costs and surprising us with its efficiency.

Sales and earnings beat, some of that was from lower provisions for credit losses. WF cut their full-year forecast. Shares were punished by 5% yesterday. He's sticking by this, though. Trusts the CEO to get things back on track.

Was downgraded today. WFC just got out of the penalty box after Washington lifted its asset cap to allow WFC to do more lending. Also, the bank stocks have become leaders

Friday kicks off bank earnings season, a sector that has been crushed, because Wall Street expects a downturn in the economy. WFC was doing well into it slammed into Trump's tariffs. The CEO will have to be cautious on Friday; he has no choice. But shares won't rally on that sentiment.

Tailwinds: no tariffs on US banks and they will be less regulated by Trump. Today, Morgan Stanley said WFC could be a huge winner with less regulation: better loan growth, trading revenues and lower expenses. He's bullish.

Looks really good at these levels.

They reported this week, missing slightly expectations on the top line, but beat huge on the bottom. Net interest income beat and brokerage commissions were up. Excellent credit quality and maintained their aggressive share buybacks. Management raised the forecast for net interest income.

Banks earnings happen next Wednesday: JPM, Goldman, Wells Fargo and Citi. He expects good reports from all. The expected increase in M&A will benefit all. These stocks are off their highs at very low PEs. He's been buying them.