Wells Fargo preferred stock is one of my favorite banks that has issued preferred stock because: (1) Wells Fargo preferred stock is backed by outstanding bank fundamentals; (2) Wells Fargo preferred stock continued to get paid during the financial crisis on all classifications of preferred stock; and (3) the value of the Wells Fargo preferred stock generally trades close to fair value of the listing.
That third element may surprise you, as you might intuitively think that Wells Fargo preferred stock might be subject to the same “flight to quality” overvaluation syndrome that hits the common stock equity markets. Usually, in the preferred stock markets, it is the junk yielding north of 10% that is the most subject to overvaluation.
This isn’t intuitively obvious, but I’ll see if I can explain. Remember a year or so ago when we talked about how some of the biggest bubbles in the student … Read the rest of this article!