Cooperman on Wells Fargo: Interest Rate Hike Could Boost Profits
Leon Cooperman on Wells Fargo
In the previous part of this series, we saw that Leon Cooperman has a positive stance on financial stocks. He also expects that the interest rates will rise from current levels and that the rising interest rate will increase the profit margin of financial stocks.
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According to a 13F filing report, Warren Buffett’s Berkshire Hathaway (BRK-B) is the largest investor in Wells Fargo (WFC) as of June 30, 2017, with 467.9 million shares. Despite its fake account scandal, Warren Buffett is bullish on this stock. He said, “Somebody messed up, and the job is to find out who messed up…When you find a problem, you have to jump on it.”
Similarly, Cooperman also has a positive stance on this stock. He believes this stock could provide a strong return in the near future.
Performance of Wells Fargo
On November 2, 2017, Wells Fargo was trading at $56.48. Its 52-week high is $59.99 and its 52-week low is $44.49. On a year-to-date basis, the stock returned nearly 2.6% as of November 2, 2017. The Financial Select Sector SPDR ETF (XLF), which tracks the performance of the financial sector, rose nearly 14.2% during the same period. Over the last one year, the stock has returned nearly 26.6%. The stock is presently trading at a trailing price-to-earnings ratio of 14.6x and a 12-month forward price-to-earnings multiple of 13.5x.
You may be interested to read, Leon Cooperman: The Market’s Not Cheap, but It’s Not Expensive.