Major Wells Fargo Shareholder Trims Position By 5%

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October 31, 2016 1:13pm NYSE:WFC

wells-fargo-signEmbattled banking giant Wells Fargo & Co (NYSE:WFC) saw a major mutual fund slash its holdings last month amid ongoing fallout from a far-reaching account opening scandal.


According to a regulatory filing, mutual fund Fidelity Contrafund (FCNTX) cut its stake in WFC by some 5%. From Reuters:

Run by star portfolio manager Will Danoff, Contrafund had a $2.2 billion stake in Wells Fargo, or about 50.1 million shares, at the end of September, according to a report released on Sunday. The fund owned about 52.65 million shares at the end of August.

That $2.2 billion stake represents about 1% of Wells Fargo’s total market cap. According to fund literature, FCNTX invests “in securities of companies whose value FMR believes is not fully recognized by the public,” going after “either ‘growth’ stocks or ‘value’ stocks or both.”

Most of the Fidelity fund is made up of tech companies like Facebook and Alphabet, with Wells Fargo the only major holding in the banking space.

The bank’s shares dragged on Contrafund’s third-quarter performance, falling nearly 6 percent amid disclosure Wells Fargo branch staff opened as many as 2 million accounts without customers’ knowledge.

Contrafund is the third-largest mutual fund investor in Wells Fargo, behind two Vanguard Group index funds, according to Thomson Reuters data.

The fallout from Wells Fargo’s account opening scandal is still yet to be fully realized. While management has claimed the issues haven’t affected its retail operations much yet, a recent survey showed some 14% of WFC retail customers planned to leave the bank.

Wells Fargo shares rose $0.05 (+0.10%) to $46.28 in Monday afternoon trading. Year-to-date, WFC has fallen 14.85%, versus a 4.25% gain in the benchmark S&P 500 index during the same period.

WFC-2016-10-31


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