Where Are Wells Fargo Defectors Putting Their Money?

It's now been two months since news broke that Wells Fargo & Co WFC would be forced to pay an $185 million fine for opening fraudulent customer accounts. In recent weeks, the bad news has kept piling on the battered bank, with news of a $4.1 million Justice Department fine for improperly repossessing military members’ automobiles.

In addition, the company is still dealing with a number of lawsuits from customers regarding the account debacle. It’s no wonder Wells Fargo stock is down 8.6 percent in the past two months.

Wells Fargo has very few true peers from which fleeing investors can choose. Where are all the Well Fargo defectors heading?

It’s likely that the other three “Big Four” U.S. money center banks, Bank of America Corp BAC, Citigroup Inc C and JPMorgan Chase & Co. JPM are each getting a portion of the funds flowing out of Wells Fargo. Each stock has outperformed the SPDR S&P 500 ETF Trust SPY since the Well Fargo news broke.

However, the stocks’ relative performances seem to indicate Bank of America may be the top choice among Wells Fargo defectors. Citi and JPMorgan have gained 4.8 and 4.0 percent, respectively, in the past two months. Bank of America has surged 8.1 percent in that time, a move almost exactly equal in magnitude to Wells Fargo’s fall.

All indicators are pointing to the Fed resuming its rate hike schedule sooner rather than later, and now may be a great time to own shares of any U.S. bank not named Wells Fargo.

Disclosure: The author is long C.