Dick Bove: A Smart Old Dude Or Jim Cramer In Disguise?

Yesterday's late sell-off in stocks is being attributed in the main stream business media to Rochdale Securities banking analyst Dick Bove's downgrade of Wells Fargo (NYSE: WFC). While sensationalized less, some pros even suggested that some of the selling pressure was related to the call.

Late yesterday afternoon, as noted at StreetInsider.com, Bove downgraded Wells Fargo to Sell. Bove called the bank's earnings low-quality and said profits were boosted from real estate hedging.

Today on Fox Business Network Bove explained his call more clearly. Bove told FOX Business Network's Alexis Glick, "I think they're actually two, three, or four things. The first thing is that Wells Fargo is not expanding its loan book and that's similar to a manufacturing company not selling widgets. Secondly, it looks to me like the margins on the loans that are being sold are going to come down. Thirdly, I see a big increase in their loan losses right through the beginning of next year, and fourth I think there was some unsustainable gains shown in their hedging portfolio, so when you put it all together it looks like the company should show about 44 to 45 cents a share in earnings per quarter instead of the 55 to 56 cents they've been showing… I think the multiple is too high, the earnings will be disappointing, and we're going to have to wait about a year for this company to get its position back where it should be."

Why would the market listen to Bove, who earlier in the day Wednesday told CNBC viewer that Wells Fargo is proving "itself to be a standout" in the banking industry? In addition, Wells Fargo has risen about 50% since he downgraded to Neutral in April.

Also Bove has made other horrible calls. Just before Lehman's collapse, Bove was suggesting it was a great value and would easily get acquired. He had a Buy rating on the stock going into the bankruptcy.

We've also discussed recent reckless comments from Bove on Citigroup (NYSE: C). His "normalized EPS" views on C would make that company one of most profitable in the world. Bove has a Buy rating and $6.50 price target on Citigroup.

To put it lightly. While Bove may be a smart old dude, who's seen the ups and downs of the banking sector, he is a media whore. We would even say he is akin to large CNBC personality Jim Cramer - only less entertaining (we're not sure 'The Dick Bove Show" would go over well with viewers.) Bove may be making his calls to make headlines - a Cramer trick.

UPDATE: Dick tells�WSJ that he won't give instant earnings analysis after the CNBC/WFC debacle yesterday.

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