Charlie Munger Stock Portfolio: 2 Biggest Positions

In this article we take a look at the top 5 positions of Charlie Munger as of the end of the second quarter. To skip this part and read Charlie Munger’s history and his other favorite stocks, go to Charlie Munger Stock Portfolio: 5 Biggest Positions.

2. Wells Fargo & Company (NYSE:WFC)

American financial services giant Wells Fargo remained one of the top picks of Charlie Munger as the second quarter of this year came to an end. Munger’s Daily Journal had a $64 million stake in the company. The stock rallied after posting strong third quarter results as the company’s numbers were helped by rising interest rates and net interest income. In October, Goldman Sachs analyst Richard Ramsden upgraded Wells Fargo stock to Buy from Neutral, citing revenue upside, efficiency improvement from rates, loan-growth-fueled net interest income, and expense reductions. The analyst said that in case of a recession, Wells Fargo has less risk as compared to its peers.

However, hedge fund sentiment for Wells Fargo saw a dip in the second quarter. 83 hedge funds out of the 895 tracked by Insider Monkey reported having stakes in the bank at the end of June. In the previous quarter, 93 funds in our database were long the stock.

Here is what Oakmark Funds specifically said about Wells Fargo & Company (NYSE:WFC) in its Q3 2022 investor letter:

“Wells Fargo & Company (NYSE:WFC) has been a long-time holding in the Oakmark Fund. Despite the positives of higher interest rates and the company making good progress on reducing expenses and regulatory consent orders, Wells Fargo shares have fallen one-third from their highs earlier this year to roughly 6.5x our estimate of normalized earnings power, and the stock ended the quarter at ~1x next year’s tangible book value. We find this is far too cheap for a strong banking franchise capable of tangible returns in the low-to-mid teens across business cycles.”