Out Fox The $treet

  Wells Fargo & Company reported a solid Q1 2023 beat despite the banking crisis. The large bank faces higher credit losses and deposit pressure. Wells Fargo repurchased $4 billion worth of stock in a strong return to buying cheap shares. Wells Fargo & Company stock remains cheap at 8x EPS targets. While the U.S. banking sector was in a crisis during Q1,  Wells Fargo & Company  ( NYSE: WFC ) spent the quarter repurchasing a ton of shares. The large bank definitely faced growing credit problems, but the credit losses  aren't alarming. My  investment thesis  remains ultra Bullish on the stock at $40. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

  The market didn't initially like the Citigroup (C) Q4 earnings report, but the report was an actual home run. The weak bank proved why big stock buybacks work. No surprise here that the bank is up about 4% in mid-day trading.

Wells Fargo hiked capital return plans by over $3 billion. The large bank had the smallest hike of the large banks. The valuation thesis along with lingering fraud headwinds limit the relative value of the stock. At a time when most of the large banks approved massive increases to capital returns,  Wells Fargo  ( WFC ) had a not so surprising limited bump in  capital plans . The end result is the large bank that use to lead the sector in capital returns is now turning into a laggard confirming by previous  investment thesis . Read the full article on Seeking Alpha.  Disclosure: Long C. Please review the disclaimer page for more details. 

Wells Fargo reported Q4 results that missed analyst estimates. The large bank still trades at the high end of sector valuations, despite a relative underperformance over the last three months. Investors should remember that success is all relative. Before the open on Friday,  Wells Fargo  (NYSE: WFC ) reported  quarterly earnings  along with a group of large financials. The troubled bank actually missed estimates while the sector had generally blowout numbers. Read the full article on Seeking Alpha.  Disclosure: Long C. Please review the disclaimer page for more details. 

June was a good month for the Net Payout Yields model on a relative basis. The model outperformed the SP500 by 0.67% with a loss of 1.16% versus the 1.83% loss for the benchmark. Naturally on a absolute basis the model had a disappointing month, but it performed as expected by being less volatile than the benchmark and holding up better during the worse parts of the big drop mid month. The model remains fully invested with an average weight of only 2% cash for June. The goal of the model is to let the companies themselves buyback stock at lower to take advantage of any market weakness rather then trying to time the market. Trades Only one trade was made during the month. Wells Fargo (WFC) was sold as the stock failed to keep the Net Payout Yield at acceptable levels. The stock was replaced in July with Travelers (TRV) that has an extremely high NPY of around 20% given its consistent large stock buybacks. Top Performers Even considering the nearly 2% loss in the SP500 for June, ...

Pre financial crisis, banks provided some of the most consistent dividends, but the crisis for the most part wiped out the money returned to shareholders. Even the better banking stocks like JPMorgan ( JPM ) only maintained small dividends of $0.20 or 0.4% on an annual basis. Basically just enough to claim they pay a dividend and not much more. Buybacks were all but outlawed by the regulators. On Friday, the market got news from some of the large banks that the government will allow them to start returning capital to shareholders. Considering our focus on Net Payout Yields (combination of dividends and net stock buybacks) we wanted to analyze the forecasted payouts of the top banks to see which ones will now be at attractive yields.  See the rest of the article at Seeking Alpha . 

Wells Fargo (WFC) has been a long time holding in the Net Payout Yield Portfolio mainly because the company use to pay a sizable dividend. WFC also has one of the best management teams in the banking sector. The position size has remained small for a while mainly due to the cut of the dividend back in the financial crisis. WFC currently pays a annual divy of $.20 amounting to paltry 0.8%. Nothing worthwhile of the Net Payout Yield which typically finds companies with yield exceeding 5-6%. Today, the CFO announced  at the BancAnalysts Association of Boston conference that they were working on plans of reinstating a dividend that eventually would match the 35-40% payout ratio from before the crisis. At current stock prices, that would place the divy over 4% based on the estimate of earnings at $2.8 in 2011. WFC becomes a lot more attractive to investors with a 4%+ divy. Looking at adding to the position prior to such a move. Via Dow Jones Newswires: Wells Fargo & Co. (...