Saturday, May 2, 2009

Buffett Would like to Buy All of These 2 Banks...

...if he could.

Warren Buffett tells shareholders that "I would love to buy all of US Bancorp or I would love to buy all of Wells Fargo, if we were allowed to do it."

Buffett says they're making a lot of money and have strong earnings power, in contrast to a company like Chrysler.

Buffett again singled out Wells Fargo for particular praise, calling it a "fabulous" bank that "will be a lot better off in a couple of years than if none of this had happened."

Recalling that Wells shares fell below $9 earlier in the year, he said at that price, "If I had put all my net worth in one stock, that would be the stock."

Not all banks are created equal even if, in the short-to-intermediate run, the price action in the capital markets makes it seem that way. The problem becomes self-fulfilling when the better banks are forced to raise capital at prices that are far less than their per share intrinsic value.

As Clint Eastwood once said in the movie Unforgiven:

"Deserve's got nothin' to do with it."

The transfer of wealth represents real money whether it's fair or not.


Long U.S Bancorp and Wells Fargo

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