Wells Fargo & Co (WFC), Goldman Sachs Group Inc (GS) & More: This Week in Finance

As expected, it was a meaningful week in terms of major events that occurred in the financial sector. On Wednesday, the FOMC left interest rates unchanged and, on the same day, news emerged that billionaire Leon Cooperman of Omega Advisors was charged with insider trading by the Securities and Exchange Commission.

Having said that, let’s focus on individual financial stocks, particularly: Wells Fargo & Co (NYSE:WFC), Goldman Sachs Group Inc (NYSE:GS), Bank of America Corp (NYSE:BAC), E*TRADE Financial Corp (NASDAQ:ETFC), and JPMorgan Chase & Co. (NYSE:JPM) and take a look at the events involving them this trading week. In addition, we’ll analyze the hedge fund sentiment towards these stocks, based on the latest 13F filings of the investors we track at Insider Monkey.

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Wells Fargo & Co (NYSE:WFC) inched up 0.7% this week despite more fallout from the bank’s shady sales tactics in which former employees created 2 million fake accounts scandal. On Tuesday, the company’s CEO, John Stumpf, went to the Capitol Hill, where he was grilled by senators from both parties over the incident. Senator Senator Elizabeth Warren called for Mr. Stumpf to resign, return the money that he was paid during the scandal, and even be investigated.

“Have you resigned? Have you returned one nickel of the millions of dollars that you were paid while this scam was going on?,” Mrs. Warren asked Mr. Stumpf.

Meanwhile, Warren Buffett, whose Berkshire Hathaway owns around 10% of Wells Fargo & Co (NYSE:WFC), has said he won’t talk about Wells Fargo until after the November elections. Mr. Buffett being quiet means Stumpf will have less support if the political controversy over the issue doesn’t fade away. Wells Fargo bulls just hope the company can move on from this scandal as quickly as possible. Many analysts feel the stock has long-term upside given the 3.3% yield at current prices and the eventually rising interest rates. At the end of June, 88 investors tracked by Insider Monkey held shares of Wells Fargo, down from 90 funds a quarter earlier.

Goldman Sachs Group Inc (NYSE:GS) made headlines this week after the investment bank announced that it will lay off 30% of its investment banking workforce for the Asia region excluding Japan. Most of the layoffs will occur in China, Singapore, and Hong Kong due to slower capital activity (including M&A) in the region. The news of the layoffs show that Goldman management is paying close attention to containing costs and delivering value to shareholders. Goldman shares inched lower by 0.46% in the week. Of the 749 top funds that we track, 68 were long Goldman Sachs Group Inc (NYSE:GS) at the end of the second quarter.

On the next page, we examine the major events that surrounded Bank of America Corp, E*TRADE Financial Corp, and JPMorgan Chase & Co.
Bank of America Corp (NYSE:BAC), E*TRADE Financial Corp (NASDAQ:ETFC), JPMorgan Chase & Co. (NYSE:JPM) were all in the spotlight this week due to the Fed’s decision to keep interest rates unchanged. Although the decision would normally have sparked a sell-off, shares of the three stocks either rallied or fell a fraction of a percent this week mainly due to confidence that the Federal Reserve will only be delaying the eventual rate hikes for a few more months. In the statement issued after the FOMC meeting, Federal Reserve Chairman Janet Yellen said that their “decision does not reflect a lack of confidence in the economy”. The Fed added that “near-term risks to the economic outlook appear roughly balanced”.

In other news, E*TRADE trended this week after news broke that hedge fund manager Leon Cooperman of Omega Advisors has been charged with insider trading. According to its last 13F, Leon Cooperman‘s Omega Advisors owned over 3.15 million shares of the brokerage at the end of June, which represent around 1.15% of the company’s outstanding stock. If his fund is forced to liquidate, some traders speculate that Omega could be forced to sell some or all of its E*TRADE shares.

Among the funds we track, 102 funds owned $5.28 billion of Bank of America Corp (NYSE:BAC)’s stock, which accounted for 3.90% of the float on June 30, versus 110 funds and $5.52 billion respectively on March 31. The number of funds with holdings in JPMorgan Chase & Co. (NYSE:JPM) rose by two quarter-over-quarter to 99 at the end of June, while in E*TRADE 35 investors amassed 11.30% of the float heading into the third quarter.

Disclosure: None