Wells Fargo & Co (NYSE: WFC) investors can breathe a sigh of relief after one of the company's largest and most influential shareholders once again gave the stock a vote of confidence. In an interview with CNBC on Monday, billionaire Berkshire Hathaway Inc. (BRK.A, BRK.B) CEO Warren Buffett said he still has confidence in Wells Fargo.
The Federal Reserve recently slapped Wells Fargo with an asset growth restriction due to what it called "widespread consumer abuses." Wells Fargo has admitted employees created millions of fraudulent accounts for real customers in an effort to hit aggressive sales targets. The company also reportedly sold unneeded auto insurance to as many as 570,000 customers.
The Federal Reserve said Wells Fargo will be restricted from growing its assets beyond its current $2 trillion level until it can prove it has improved its internal controls and risk management.
As of Buffet's annual Berkshire shareholder letter released Saturday, Berkshire owned more than 482 million shares of Wells Fargo stock representing roughly 9.9 percent ownership of the company. Wells Fargo investors were likely uneasy after Buffett failed to specifically mention the Fed crackdown in the letter, but he addressed the issue on Monday.
Buffet said he believes new Wells Fargo CEO Tim Sloan and the current management team will work through these problems eventually.
"He's working like crazy and trying to clean things up, but he's had a lot to clean up," Buffett says of Sloan.
He also says that it's unlikely there will be any more major abuses uncovered. "My guess, and it's just a guess, is that they have scrubbed and scrubbed and that they have found out the things that were done wrong."
In 2009, Buffett famously said if he were forced to put all his money into a single stock, he would choose Wells Fargo. When asked if he still felt that way today, Buffett was somewhat coy.
"If you look at our holdings, you would assume that we like them in the order in which they rank by dollar value of holdings," he says.
In his letter, Buffett revealed that Wells Fargo is Berkshire's largest stake, worth $29.2 billion. Apple (AAPL) is a close second at $28.2 billion.
"But if you look at them in terms of recent purchases, over the last year we've bought more Apple than anything else," Buffett said.
