Caveat Emptor

So, just when we thought chicken-little was still crowing, Wells Fargo scoops up ALL of Wachovia from the palm of Citigroup. In my view, this deal is a critical turning point. It’s a turning point primarily because it’s a view by a well regarded, well respected management team that the value of the WB franchise was more than perceived by a competitor, without government assistance. With this offer, WFC set a floor for those assets, which is above what the prior bid was and this is important, as until now, the direction of pricing was south NOT north.

An intriguing point to note within this deal structure is that Berkshire is the largest shareholder of Wells Fargo.  Mr. Buffett, a re-known value buyer has gotten knee-deep in financials over the last few weeks.  Most recently Goldman Sachs raised $10B, $5B in perpetual preferred to Berkshire with a 10% dividend and an …