Wells Fargo & Co. shares may get a shot in the arm if it turns out that renowned investor Warren E. Buffett has actually increased his stake in the California banking company.

In a conference call on Friday, bank analyst Thomas K. Brown of Donaldson, Lufkin & Jenrette Inc., an avid Wells Fargo supporter, told clients that Mr. Buffett has raised his ownership position.

He said the information is buried deep in the proxy statement of International Dairy Queen, a company Mr. Buffett acquired through Berkshire Hathaway Inc. last Oct. 21.

Mr. Buffett, Wells Fargo's biggest shareholder, was the catalyst for turmoil last August, after investors and journalists inferred from filings with the Securities and Exchange Commission that he had sold a large portion of his holding. The presumption may have been erroneous.

At the time, Wells shares plummeted on the news.

Mr. Buffett typically declined to elaborate on the filings by Berkshire Hathaway, his Omaha-based investment company. The SEC also declined comment.

Since then, Wells Fargo's shares have performed poorly. After recovering from the late summer swoon, the stock was pummeled again as investors grew anxious about the San Francisco-based company's disappointing performance in integrating First Interstate Bancorp. Disappointing fourth-quarter earnings also hurt the stock. Indeed, since reaching its 52-week high of $339.4375 on Dec. 12, Wells shares have tumbled close to 30%.

Wall Street analysts also have not been kind. According to First Call Corp., Wells Fargo's consensus investment rating was 2.7 on a declining scale of 1 to 5, with 1 a "buy." That was below the average rating, which is 2.2, according to Chuck Hill, director of research at First Call.

Of 21 analysts with coverage, 14 recently rated Wells Fargo a "hold" and only two rated the company a "buy."

However, that could change dramatically, if, as Mr. Brown said, Mr. Buffett actually increased his holdings between 172,000 shares to 856,000 shares in the first three months of 1997.

"The reason that we know that is Wells Fargo & Co.'s proxy lists Mr. Buffett as owning 7.2 million shares," said Mr. Brown. "The International Dairy Queen proxy that was filed in December of last year shows that Warren Buffett owns 9% of Wells Fargo stock."

"If you calculate the holdings based on the Sept. 30 shares outstanding for Wells Fargo, that would mean an increase of 172,000 to 866,000 shares," explained Mr. Brown.

"The average of that is 519,000, which is right in the rumor mill of what we have been hearing about his increasing his holding by half a million shares," said Mr. Brown.

Mr. Brown, who is the only analyst to have a "top pick" on the company, also said that he expects Wells Fargo to get an imminent boost because the challenges of integrating the First Interstate merger "are history."

He also noted that the company's consecutive quarterly credit card chargeoffs are down.

Mr. Brown said chargeoffs in the credit card portfolio totaled $100 million in the fourth quarter versus $104 million during last year's first quarter, $120 million in the second quarter, and $112 million in the third.

Mr. Brown said that he expects chargeoffs to continue to fall and expects the company to eventually sell its credit card portfolio.

Finally, the analyst anticipates stronger-than-expected revenue growth at Wells Fargo, partly in view of the company's very conservative forecasts in this area.

Wells Fargo shares, which ticked up slightly in the last three days of last week, fell 62.5 cents, to $309, in Friday trading.

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