Wells Fargo & Company (NYSE:WFC), like its peers, is becoming a bank with many faces. Its latest conquests are now hedge funds. The stagecoach-encrusted bank is known for its conservative model of operations, so the new venture sounds a little unusual for it. But this is not the first time the bank has decided to wade into the shaky waters of the hedging business. In April of this year, Wells Fargo & Company (NYSE:WFC) touched the surface of this industry by buying Merlin Securities. This firm provides technological, brokerage, lending, and trading services to hedge funds and had over 500 clients at the time the deal was made. This time, Wells Fargo & Company (NYSE:WFC), has decided to go a little deeper, it is shopping for funds with as little as $5 billion under management, up to $12 billion of assets, Financial News reports. WFC’s CEO, Mike Niedermeyer, said,
“We are keen to provide advice on alternatives allocation. It is the thing our clients request most often.”
He also said that his interest is in buying a fund of hedge funds, or more commonly called a fund of funds (FoF), rather than investing in hedge funds directly. He also expected cuts in the management and performance fees of these funds in future.
Corsair Capital, the event-driven long-short equity hedge fund, gained 6.6% net during the second quarter, bringing its year-to-date performance to 17.5%. Q2 2021 hedge fund letters, conferences and more According to a copy of the hedge fund's second-quarter letter to investors, a copy of which of ValueWalk has been able to review, the largest contributor Read More
Recently we covered WFC’s venture into investment banking, where it is stepping up on providing advisory services on mergers, stocks, and bonds. While the diversification into other avenues may help Wells Fargo in serving a wide range of customers, it is also seen as a risky move by pundit, Dick Bove of Rochdale Securities, and analysts at Moody’s Corporation (NYSE:MCO) . Wells Fargo has made a stable reputation for itself by sticking to its business in equity and bonds, and has been the most successful bank in the business of mortgage lending. By acheiving these new milestones, Wells Fargo & Company (NYSE:WFC), will gradually stand in line with other banks like, JPMorgan Chase & Co. (NYSE:JPM), Goldman Sachs Group, Inc.(NYSE:GS), and Morgan Stanley (NYSE:MS).