From: Richard Kahn To: "Jeffrey E." <jeevacationggmail.com> Subject: Fwd: WFC Trade Idea Date: Mon, 19 Sep 2016 22:02:59 +0000 Attachments: WFC.pdf Inline-Images: image001.gif; image002.png Richard Kahn HBRK Associates Inc. 575 Lexington Avenue 4th Floor New York, NY 10022 tel 212-971-1306 fax 646-350-0954 cell 917-414-7584 Begin forwarded message: From: "Ens, Amanda" <I Subject: WFC Trade Idea Date: September 19, 2016 at 1:49:00 PM EDT To: "1 Trade: Sell WFC Jan 40P to buy the Jan 47/50 CS for 0.25 [Ref: 45.85; Our 1Y M.: $501 Thesis: 1.) Since the $1.85MM settlement over improper sales tactics, WFC stock has shed —20BN in market value. Erica outlined in a research report today that the total near-term impact to earnings along with the fine should be around $650MM. Even after discounting the possibility of a another fine or reduction in earnings multiple, the market cap lost seems egregious (research report attached below). 2.) US active managers were 4% overweight in August vs. 21% overweight a year ago reducing the risk of incremental selling pressure. 3.) Erica compares this incident to the "London Whale" recovery for JPM where the stock outperformed the BKX after a 3M period. 4.) Even at $4.00 EPS (compared with our estimate of $4.15) and a 10X multiple (compared to our estimate 12X) we get $40 as the worst case for the stock price 5.) 3M WFC implied vol is in the 75th percentile and the structure is net short vega (chart attached below) 6.) Senate testimony is at 10 ET tomorrow (Sep 20th) Research attached EFTA00818103

Source: Bloomberg Amanda Ens Director Bank of America Merrill Lynch Merrill Lynch, Pierce, Fenner & Smith Incorporated One Bryant Park, 5th Floor, New York, NY 10036 Phone: 212.449.7781 Mobile: 917.386.3280 The power of global connectionsTM This message, and any attachments, is for the intended recipient(s) only, may contain information that is rivileged, confidential and/or proprietary and subject to important terms and conditions available at If you are not the intended recipient, please delete this message. EFTA00818104