Michael Burry’s 5 New Stock Picks

2. Wells Fargo & Company (NYSE: WFC)

Value: $7,545,000
Percent of Michael Burry’s 13F Portfolio: 3.36%
Number of Hedge Fund Holders: 99

Michael Burry joined the 99 hedge funds that are bullish on Wells Fargo in the fourth quarter, compared to 90 funds in the previous quarter. Scion bought 250,000 shares of the company, worth $7.55 million. The company recently said that it continues to see a strong mortgage origination rate in the first quarter of 2021. The stock is up 42% over the last 12 months.

Warren Buffett’s Berkshire Hathaway is one of the 99 hedge funds tracked by Insider Monkey having stakes in WFC at the end of the fourth quarter. The fund owns over 52.4 million shares of the company.

Miller Value Partners, in their Q4 2020 investor letter, said that Wells Fargo & Company (NYSE: WFC) has been added in their portfolio during the second half of 2020. Here is what Miller Value Partners has to say about Wells Fargo & Company in their Q4 2020 investor letter:

“During the second half of the year, we initiated a position in Wells Fargo (WFC). The company’s share price has been under significant pressure since the 2016 account scandal, leading to senior management resignations, significant incremental expenses, and regulatory oversight. The company has a new CEO, Charlie Scharf, who joined in 2019 from JP Morgan. Charlie has been moving quickly to turnaround the company. He has brought in six new members to the Operating Committee all from outside the company and has recruited numerous successful senior executives from JP Morgan, BNY Mellon, and other leading financial institutions to fill senior roles at the bank. The company is taking a fresh look at each business segment, benchmarking against its peers. The company’s operating efficiency is more than 1700bps out of line with their peer group, providing a $10B cost and efficiency opportunity over the next couple of years. Wells Fargo’s stock price was more than cut in half during 2020; we entered the position at a 40% discount to book value which was near 30 year lows and approaching 2008-09 Financial crisis levels. Over the next couple of years, greater operating efficiencies and loan growth would support a return to 10%+ ROE, normalized EPS of $5/share, and book value likely approaching $50/share. We believe it’s more likely than not Wells Fargo’s share will be a top performer over the next couple of years.”