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You can't tell by the share price -- it's down nearly 20% so far in 2008 -- but Wells Fargo (NYSE: WFC ) is weathering the financial crisis quite well. You can get a clear indication of Wells' comparatively strong stance by looking at the share movements of archrivals such as Citigroup (NYSE: C ) and Bank of America (NYSE: BAC ) , which have fallen more than twice as much as Wells has this year, as a result of much higher levels of subprime exposure and riskier lending practices that are coming home to roost.
JPMorgan Chase (NYSE: JPM ) has fallen about 20% year to date, too, and finds itself in a similar position to Wells. Both Jamie Dimon and John Stumpf, the respective CEOs of JPMorgan and Wells Fargo, found the risk/reward trade-off of the mortgage business to be less than ideal. They were, therefore, a select minority in a sea of peers who tripped over each other to originate and securitize mortgages and take advantage of the frenzied pace of housing-price appreciation and turnover.
The rest is history, and Dimon has already used his superior balance-sheet positioning to purchase rival Bear Stearns. Speculation abounds that he's on the prowl for other opportunities as well, with embattled Washington Mutual (NYSE: WM ) and Wachovia (NYSE: WB ) frequently cited as prime buyout candidates.
But what about Wells Fargo? It must surely be planning to snap up rivals on the cheap to build its market share, right?
Well, sort of. In a recent interview, Stumpf expressed an interest in acquiring additional insurance-distribution capabilities or a wealth-management provider -- a notion that brings Northern Trust (Nasdaq: NTRS ) to mind, though its share price rarely falls to the bargain-basement levels. Stumpf also mentioned a focus toward bolt-on acquisitions in the core Western market, rather than trying to score a megadeal to get bigger in a hurry.
Though not overly newsworthy, this proclamation should come as no surprise to shareholders, who have become accustomed to Wells Fargo's preference for more predictable organic growth and a continued focus on cross-selling a number of financial products to its loyal customer base. Sticking to its knitting has served Wells Fargo well, and the stock price direction should eventually return to reflect the appealing long-term fundamentals of the business it's based on.