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Wachovia May Not Need to Break Bank


CEO says no further capital necessary.


I realize it's your first day back at the office after that long Labor Day weekend, during which you probably ingested too many hot dogs, too many mojitos - or both. But try and stay with me here, okay?

On Friday, while many of us were making weekend plans, Wachovia (WB) CEO Robert Steel was quoted as saying that, "given what he knows now," it shouldn't be necessary to dilutively raise more capital, and that "he is even more confident about the levers available within the company."

To me, this is a great sign. Given all the uncertainty in this market, particularly among the financials, I think it's great to see Steel come out and say he has no plans to do any deals that might dilute shareholder value.

Of course, that doesn't mean he'd still be optimistic if the other macroeconomic shoe were to drop. But it did seriously perk my interest - especially given some of the other things that have been going on at the North Carolina-based bank.

First, were you aware that Mr. Steel recently bought 1 million shares in the company? I wasn't, until I saw the above news and decided to see if he's putting his money where his mouth is. Turns out he is: According to the Atlanta Business Chronicle, he's invested more than $16 million in Wachovia.

That's a lot of money - and a sign of confidence in the company's future. In any case, this big purchase, coupled with the aforementioned remarks, leads me to believe that better days may indeed lie ahead for the beleaguered bank.

It wasn't that long ago that rumors were circulating that JPMorgan Chase (JPM) might gobble up Wachovia. In fact, I remember penning an article discussing the pros and cons of such a move back in June.

Now, nothing became of this, of course - and given Steel's insider purchase, my hunch is that nothing's imminent. But it's just one more positive note telling me to keep a closer eye on the shares. The time to bottom-fish could be nearing.

On the downside, my gut tells me to remember that tax-loss selling season is approaching. Given the beating the shares have already taken, there could be some pressure on the stock toward year-end.

Wachovia closed at $15.89, down $0.10 or 0.63%.

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No positions in stocks mentioned.

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