First I-Banking, Now Wells Fargo Looks to Enter into Hedge Funds

wells fargoBy The original uploader was Henry W. Schmitt at English Wikipedia (Transferred from en.wikipedia to Commons.) [Public domain], via Wikimedia Commons
First I-Banking, Now Wells Fargo Looks to Enter into Hedge Funds

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.

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).

For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)

About the Author

Tabinda Hussain
Tabi covers hedge funds for ValueWalk. Although Tabi is an expert in hedge funds, her academic background is in Biology. Follow her on twitter @tabihussain

Be the first to comment on "First I-Banking, Now Wells Fargo Looks to Enter into Hedge Funds"

Leave a comment