I sat and listened to Congress grill the CEO of Wells Fargo (WFC) yesterday. I don't have any accounts or credit cards with them, but I do have a car loan, and that was enough to get me to listen.
The hearing went as expected. Congress asked tough questions and the CEO, John Stumpf, avoided substantial answers. My biggest takeaway in terms of Stumpf was that he answered more like a man trying to protect his job than one trying to protect his shareholders.
The issue here seems like the entrance to a wormhole that travels deep into the heart of Wells. The stock has taken a hit in 2016, never really seeing green despite the sector holding relatively flat. (Wells Fargo is a holding in Action Alerts PLUS.)
The recent revelation of deceptive practices does have an impact on the year-to-date numbers, and given the size by which Wells trails other big money-center banks, may have some thinking this could be a great reversion to the mean trade. It may be, but it will be one without me.
Even if Wells can avoid other troubles, I wasn't impressed by what I heard Tuesday and have no desire to put my money in the hands of management that appears mostly concerned with their job security and golden parachute. Don't get me wrong, I'm not so naive as to believe Wells is the only company with this thinking on the executive level; however, it is the one that said so, in so many words.
When a CEO makes it apparent in front of Congress he has every intention of putting executives in front of shareholders, then I'm content looking at the thousands of other opportunities out there to earn a profit investing or trading.
I suppose I could classify this as a moral decision, and I wouldn't be alone in that type of investment thinking, perhaps only alone in choosing Wells Fargo as my example. I know several traders who won't trade anything gun related. Sturm, Ruger (RGR) along with Smith & Wesson (SWHC) are the two most obvious names that come to mind. Others may view gambling as a sin and avoid Las Vegas Sands (LVS) or Wynn Resorts (WYNN) , for example. That's their choice. I don't judge.
There are so many companies, both private and public, where a trader can place their money, so sometimes it can be helpful to have a few names to cross off the list before you even begin searching. After yesterday, Wells Fargo is off mine.