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Mairs & Power Adds Alphabet (GOOGL), Thinks Wells Fargo (WFC) Has Been Overly Punished

Mairs & Power Sells MTS Systems

Mairs & Power unloaded its position in Minnesota-based test systems industrial sensors producer MTS Systems Corporation (NASDAQ:MTSC) in the third quarter, after the company’s $580 million acquisition of New York-based private company, PCB Group. The hedge fund had “concerns” about the execution being displayed by MTS Systems, and felt the rationale behind the acquisition of PCB Group was not “solid”. The letter added that the acquisition of PCB is an addition to MTS’ sensors business, an area where the company has no competitive advantage, while MTS’s durable competitive advantage in its core business is being diluted. As of the end of the second quarter, John W. Rogers’ Ariel Investments owns 1.63 million shares of MTS Systems Corporation (NASDAQ:MTSC).

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Wells Fargo Will Get Out of its Current Problems  

Mairs & Power explained its rationale behind holding on to its stake in Wells Fargo & Co (NYSE:WFC) in spite of its recent scandal, which has resulted in a $185 million fine, the laying off of over 5,000 employees, and a decimated reputation. Mairs & Power’s letter explained that it knows several top executives at Wells Fargo, and that they are of “good character”, and the fund thinks that the latest scandal does not depict a systematic problem within the company or its values.  Mairs & Power does however expect slower growth for Wells Fargo in the near future. Nonetheless, the fund thinks that Wells Fargo is being “overly punished” by the market for its recent woes. Wells Fargo recently warned investors that its litigation losses could reach $1.7 billion. Ken Fisher’s Fisher Asset Management owns 18.19 million shares of Wells Fargo & Co (NYSE:WFC) as of the end of September.

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Disclosure: None

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