It should surprise exactly no one that Wells Fargo
Turns out the view is mostly bullish. Let's have a look at a few of the key sentiment drivers.
1. Analyst opinion
Analysts like Wells Fargo. Data from Capital IQ captures their collective feeling:
|
Opinion |
Number of Analysts |
|---|---|
| Buy | 11 |
| Outperform | 7 |
| Hold | 9 |
| Underperform | 1 |
| Sell | 2 |
| No Opinion | 0 |
Eighteen analysts have either a "buy" rating or an "outperform" on the stock -- by far the majority sentiment. With nine neutral "holds" and just three negative "underperforms" or "sells," we'll classify analyst sentiment as bullish.
2. Insider buying
Next, we'll look at insider buying and selling. Over the past year, Wells Fargo insiders have sold $14.75 million worth of their company stock. During the same time period, insiders didn't buy a single share. (Data from Form4Oracle.)
Although it'd be nice to see insider buying balance out the selling, the truth is, $14.75 million of selling isn't all that meaningful relative to Wells Fargo's $165 billion market cap. Keep in mind, too, that insiders sell stock for a whole host of reasons -- to pay for a house or tuition, to diversify assets, and so forth. For purposes of this exercise, we'll classify insider buying/selling as neutral-leaning-bearish.
3. Guru buying
Next, we'll look at "guru" ownership of the stock, according to GuruFocus.
In the quarter ended Dec. 31, nine investing gurus were buying Wells Fargo shares, including Jean-Marie Eveillard, Ruane Cunniff, George Soros, and John Paulson. Two gurus -- Whitney Tilson and Arnold Schneider -- were selling in the same quarter. In the previous quarter, nine gurus were trading Wells: six buyers, three sellers.
The balance is clearly in the "buy" camp, so we'll classify guru buying sentiment as bullish.
4. Retail-investor community sentiment
For retail-investor community sentiment, I turn to Motley Fool CAPS, our proprietary stock-rating system. CAPS generates ratings on a one- to five-star scale, with five stars as the highest ranking, an indication that the Fool community believes in a stock's future. Wells Fargo has a neutral three-star rating.
5. Short-sellers
Next we'll look at whether short-sellers are circling the stock. There are 46.6 million Wells Fargo shares sold short, according to Capital IQ. As a percentage of shares outstanding, that's a short interest of 0.9%. That's not at all high, and so for determining sentiment, we'll classify the low short interest as bullish.
6. Does Buffett own it?
This is the "cherry on top" test, and in this case, it's a resounding yes: Not only does Berkshire Hathaway own Wells Fargo, but it also owns more than 7% of the company -- enough to make Berkshire the single largest shareholder.
Adding it up
The consensus opinion on Wells Fargo is "mostly bullish." Analysts, gurus, and Warren Buffett like the stock, and in another bullish sign, short sellers are staying away. The CAPS community is only neutral on Wells, and insiders -- although net sellers -- have a mostly neutral effect on sentiment as well.
Of course, you can't base an investment philosophy on who likes or dislikes the stock you own, and even a consensus bullish opinion can sometimes be a scary thing. Quoting Buffett: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."
The purpose of this series of articles isn't to make a definitive buy-or-sell call on Wells Fargo. Rather, by looking at a stock's sentiment, the goal is to help you place your own opinion of it in a broader context.
One final thing: If you want to keep tabs on Wells Fargo's movements, and for more analysis on the company, make sure you add it to your Watchlist.
