Jim Cramer Discussed These 19 Stocks and Market Shortages

8. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Holders: 76

Wells Fargo & Company (NYSE:WFC) is one of the stocks Jim Cramer discussed, along with market shortages. When a club member asked which type of business would “benefit from AI advancements beyond the producers of chips and energy and infrastructure,” Cramer replied:

I’m thinking of businesses that implement the technology to enhance their efficiency. That’s going to be the banks. The banks don’t talk much about it. The one that I think has the best handle on it is Wells Fargo. It’s a big reason why we own it for our Charitable Trust. WFC is the stock for you.

Wells Fargo & Company (NYSE:WFC) provides financial services, including banking, lending, investment, and wealth management solutions. Cramer mentioned the stock during the January 14 episode and remarked:

What about today’s reports from the other three bigs? Okay, Wells Fargo, which we own for the Charitable Trust, reported a top and bottom-line miss. While sales were up 4.5% year-over-year, and earnings grew by 13%, they still came in light, as did net interest income. It was disappointing. That said, a big chunk of that earnings shortfall came from higher severance expense… Wells Fargo, by the way, laid off a lot of people to cut costs. When you drill down, the business is doing pretty well, just not quite as well as Wall Street, and I were hoping… Efficiency ratio, a key measure of cost, fell from 68% to 64%. Lower, by the way, is better when it comes to that measure… But the analysts spoiled by CEO Charlie Scharf’s relentless cost-cutting were looking for 62.5%. Just not good enough.

Now, management told a story of a bank that’s been unshackled after last year’s removal of the Fed-mandated asset cap of 2018. Wells Fargo’s now able to grow more aggressively in areas like credit cards and investment banking. And again, you’ve gotta keep in mind that the stock was up like JPMorgan 35% over the preceding 12 months. That’s one reason why we sold some Wells Fargo for the Charitable Trust yesterday, even in the teeth of the hideous decline… I still believe in Wells Fargo longer term, but the stock… has to finish going down, and I don’t think it is yet… Now you know me, I don’t like trading, not at all. Unless you’re a full-time professional, I’m against it. But when you’re dealing with a stock that’s going parabolic like Wells has going into the quarter, then no set of numbers will satisfy the market, which is why I hate parabolic moves. And that’s why it was worth selling some… and if the stock keeps coming down, you know what? Well, we’ll get to buy the shares we sold at a much slower price.

In the end, I still believe Charlie Scharf knows how to transform what’s basically a consumer bank into an investment bank with a consumer bent. That’ll produce a higher price-to-earnings multiple, the secret sauce behind higher stock prices… And you know what? You’d wish that you bought the stock on weakness. So I’m glad we held onto the bulk of our position in Wells Fargo, but I’m also glad we did something called schnitzeling.