Dick Bove of Rochdale Securities spoke with FOX Business Network’s Alexis Glick about his market-moving call on Wells Fargo (WFC), as well as the deal between Bank of New York (BK) and the Russian government.
Below are excerpts from the interview: Courtesy of Fox Business News
On why he downgraded Wells Fargo:
“I think they’re actually two, three, or four things. The first thing is that Wells Fargo is not expanding its loan book and that’s similar to a manufacturing company not selling widgets. Secondly, it looks to me like the margins on the loans that are being sold are going to come down. Thirdly, I see a big increase in their loan losses right through the beginning of next year, and fourth I think there was some unsustainable gains shown in their hedging portfolio, so when you put it all together it looks like the company should show about 44 to 45 cents a share in earnings per quarter instead of the 55 to 56 cents they’ve been showing… I think the multiple is too high, the earnings will be disappointing, and we’re going to have to wait about a year for this company to get its position back where it should be.”
On the deal between Bank of New York and the Russian government that took place this morning:
“I think it should push the stock higher because it’s a grand slam home run for the Bank of New York. Here you had the Russian government suing them for $22 billion…they won. They won right across the board. They’re not going to pay any fines. They’re not going to be hurt in any fashion by the Russian government.”
