Economy News, Lake Economy: Wells Fargo and Co

Wednesday, December 16, 2009

REUTERS INDIA: Wells Fargo announces $6 billion common stock offering

By Jonathan Stempel and Phil Wahba

NEW YORK (Reuters) - Wells Fargo & Co, the fourth-largest U.S. bank, announced on Thursday a $6 billion common stock offering, as the bank faces regulatory stress tests to determine whether it needs to strengthen its capital.

The stock issue will be priced on Friday morning at between $20.50 and $22, said a source familiar with the situation who was not authorized to speak publicly.

While the issue would be between 11.1 and 17.2 percent below Thursday"s closing price of $24.76, it would be above Wells Fargo"s stock price for most of this year.

The results of government "stress tests" of the ability that the 19 largest U.S. banks can weather a deep recession will be released on Thursday at 5 p.m. EDT (2100 GMT).

The Wall Street Journal reported Wells Fargo could need to shore up its capital by up to $15 billion.

The San Francisco-based bank -- in which Warren Buffett"s Berkshire Hathaway Inc is the largest shareholder -- took $25 billion of capital from the government"s Troubled Asset Relief Program last fall.

While Wells Fargo said when it accepted the TARP money that it did not need the funds, its capital ratios are now lower than those of many rivals.

On December 31, Wells Fargo bought Wachovia Corp for $12.5 billion, and immediately wrote down $37.2 billion of riskier Wachovia loans.

Wells Fargo"s Tier-1 capital ratio, including the $25 billion, ended March at 8.28 percent, above the 6 percent regulatory minimum but below the double-digit ratios that many rivals maintained.

Its ratio of tangible common equity to tangible assets was 3.28 percent; many analysts prefer to see 5 percent.

J.P. Morgan Securities Inc and Wachovia Securities are joint bookrunning managers for the offering.

Wells Fargo shares fell 3.6 percent to $23.87 in after-hours trading. The stock ended down 7.75 percent on Thursday on the New York Stock Exchange, and is down 16 percent this year.

(Reporting by Jonathan Stempel, Phil Wahba, and Juan Lagorio; Editing by Bernard Orr)

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CNBC VIDEO:Buffett"s Berkshire Hathaway regigs portfolio

Posted By:Alex Crippen

Topics:Warren Buffett

What"s Warren Buffett buying? The answer appears to be not much in the first quarter of this year, although his stakes in two healthcare companies and Kraft Foods did increase somewhat.

Berkshire Hathaway"s just-released disclosure of its U.S. stock portfolio holdings as of March 31 does not include any new names. (Three months ago we learned from the quarterly filing that Buffett had accumulated a sizable stake in Kraft Foods.)

Remember, however, that Berkshire sometimes receives permission to hold back information about stocks it"s actively acquiring.

After steadily cutting back on its Ameriprise Financial

Ameriprise Financial Inc

AMP

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[AMP 49.83

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] holdings over many months, Berkshire appears to have totally eliminated the stake. This quarter"s filing does not list any holdings. It reported 4.3 million shares a year ago, 2.5 million shares at the end 2007"s second quarter, 1.5 million for the third quarter, and just 662-thousand at the end of the year.

Other changes:

Ingersoll Rand [IR 45.85 1.11 (+2.48%) ] stake increased dramatically, up 47 percent to 936,000 shares from 636,000 shares at end of Q4.
Iron Mountain [IRM 29.76 -0.16 (-0.53%) ] stake cut 28 percent to 3.4 million from 4.7 million shares. It had been cut by almost half at the end of the fourth quarter.
United Health Group [UNH 32.32 0.62 (+1.96%) ] holdings increased by 6.7 percent to 6.4 million shares from 6.0 million last quarter.
Wellpoint [WLP 51.53 1.65 (+3.31%) ] also increased. It"s also up 6.7 percent, to 4.8 million shares.
Kraft Foods [KFT 32.51 0.58 (+1.82%) ] stake increased 4.4 percent to 138.3 million shares from 132.4 million.
Carmax [KMX 21.19 -0.08 (-0.38%) ] stake increased 1.4 percent to 21.3 million shares. We first learned Berkshire had added Carmax to its portfolio in its third quarter filing from last year.
US Bancorp [USB 33.91 -0.49 (-1.42%) ] stake increased 1.6 percent to 68.6 million shares.
Sanofi Aventis [SNY 36.99 -0.07 (-0.19%) ] stake is up just a bit, edging 0.5 percent higher to about 3.6 million shares.
M&T Bank [MTB 91.64 -2.47 (-2.62%) ] increased very slightly, up 0.1 percent to just over 6.7 million shares.
Wells Fargo [WFC 28.95 -0.65 (-2.2%) ] holdings are also up a little, gaining 0.5 percent to almost 291 million shares.
Berkshire"s Burlington Northern Santa Fe [BNI 108.56 0.63 (+0.58%) ] stake increased to almost 64 million shares during the quarter, but that figure was previously disclosed in January, when Buffett completed a string of purchases during the month that were revealed in SEC filings.
Trane [ASD 46.79 0.14 (+0.3%) ] holdings fell less than 1 percent to about 10.9 million shares.