It should go without saying that the importance of good management and proper incentives are paramount when selecting investments. As we saw with Ken Lewis, the former head of Bank of America (BAC 0.14%), and Chuck Prince, formerly of Citigroup (C -0.10%), the strategic course management sets can literally make or break a bank. The Fool has created special premium research reports on all of the big banks that lay out their opportunities, strengths, weaknesses, and threats. This is an excerpt from our report on Wells Fargo (WFC -0.39%).
Wells Fargo's chief executive officer, John Stumpf, serves as a microcosm for the bank overall. Stumpf is a home-grown leader, spending over 30 years ascending the ranks of Wells Fargo. He steered its largest division, community banking, through the housing bubble, demonstrating the discipline to avoid the short-term gains promised at the time by the subprime bonanza. He was then promoted to CEO in June of 2007, just in time to shepherd the bank through the worst financial crisis since the Great Depression.
But while Stumpf is a banker's banker, conservative in his outlook and disciplined in approach, he's demonstrated a shrewdness over the past few years that clearly separates him from the pack -- with the notable exception, perhaps, of JPMorgan's (JPM 0.46%) Jamie Dimon. Among other things, he outmaneuvered Citigroup in the contest for Wachovia, thereby expanding Wells Fargo's footprint across the country, and his decision to selectively incorporate Wachovia's investment banking operations as opposed to scrapping them will richly benefit the company's shareholders for years to come.
Wells Fargo's dedication to solid, conservative banking -- championed not least by John Stumpf -- helped it vastly outperform its peers during the financial meltdown. Today, Wells is the same great bank as ever, but with its stock trading at a premium to the rest of the industry, is there still room to buy, or is it time to cash in your gains?
