wescobrk

Anyone know BAC federal DTA number or have handy? I'm curious the hit they will take to tangible book if Corp tax rate is reduced to 28% As Obama and congress have discussed in 2013? Thanks!

Eric et al, anyone concerned or changing allocation because of fiscal cliff? CBO says 4-5% hit to GDP this would result in 30% hit to corporate profits. This could cause a huge decline to the market and bigger to BAC with a beta of twice the market I believe. The question Im getting at is how much dry powder are people leaving or are you not concerned or making any changes over next few weeks? Thanks

What is the likely Basel 3 final required rate of assets? I know there is some uncertainty on the final number but is it 10% roughly with SIFI charge of total assets? BOFA has about $1.2 trillion I believe in risk weighted assets. Tangible book in June was $158 billion. Just curious of a rough range of about much more capital they have to build? Thanks.

http://www.marketwatch.com/story/bank-of-america-ceo-just-cant-win-2012-09-20 You have to love it when the stock goes down when they execute earlier than expected.

I think this was posted a long time ago but I wanted to ask those on the board that have bought leaps and then convert to the shares--how would the taxes work if the stock is subsequently sold? Does the cap gain rate apply for anything after the conversion and the marginal rate apply for the amount paid for the option leap call? If you don't mind, please lay out if buy a call and then convert within a few months and then sell the stock less than 12 months and then greater than 12 months. Thanks!

"Yeah, I don't think the "bet it all" should be taken literally - and I kinda doubt that even Rothstein did that - but it goes back to Munger/Buffett and how, when you are sure enough something is a really great opportunity and you've really done your homework, don't put 5% on it... Great opportunities don't come by everyday, so get the most of them. At some point I think Buffett had 75% in GEICO..." I remember seeing Warren and Charlie live (I don't recall the year) and Warren turned to Charlie and asked him if he ever put 100% in one security and Charlie replied, "it was more than 100%." From what I have read and heard from Warren, he never exceeded the 75% level that he had in Geico (as far as in one company % of net worth).

Sanjeev, I'd love to re-read your old interview with Sardar but can't seem to find it. I found a link but nothing was attached. Thanks!

I'll play devils advocate. In 2014 and 2015 I can understand BAC going above tbv, but among 30 analysts BAC will earn about 90 cents a share in 2013. Mr. Market places primacy on earnings and not the balance sheet. I don't see how BAC can hit tbv (Sanjeev) by Christmas which would imply about 14x earnings. BAC's cost of capital consensus is about 12% and it is earning low single digits. Clearly Mr Market can become euphoric and it go to 14 by year end but it looks unlikely even dare I say through March when tbv will probably be 14 a share. BAC is over half my portfolio and thanks to this board I'm up over 60% ytd in IRA and about 35 in taxable (my portfolio isn't that big though it is under 250k and I'm in my upper 30's to respond to a different thread regarding performance). I did my own analysis bit have a complicated option setup like Eric along with out of the money puts on S&P. I plan on selling quite a bit once it crosses 10 and probably switch to the common with a lower weighting of my port and if it comes back down -which certainly is a possibility- I can do it again, if it doesn't, I still profit but not nearly as much (but with less risk). I'm ready for board criticism on my doubts for BAC as i know it is very popular on this board.

Last BAC post for while. BAC is up about 15% within a few days. A lot of people on the board sold BAC when it got in the 9's with outs or sold altogether (I was one of them) anyone have plans to do the same as BAC crosses 9?

Bond yield curves will be “very steep” for “a very long time,” Gross wrote in a Twitter post yesterday. A period of reflation is under way, he wrote. Investors should expect “higher long rates” and “low short rates,” according to Gross, who is based in Newport Beach, California. Anyone care to comment how much greater earnings power for BAC once we have a steep yield curve? Certainly not expecting 2012 or maybe even 2013 but certainly around 2014 or 2015 and beyond? Is the tally now about $8 billion in expense savings from BAC by 2015? Also, isn't the mortgage problems costing almost $2 billion a quarter? Ive heard 1% ROA, anyone think any higher than that? Thanks

Sorry, no link to post

We own no BAC LEAPS...just common and the A warrants. Even though I believe that BAC should trade at tangible book, you have to be absolutely right on the timing buying LEAPS. We're far more comfortable with a six-year time horizon, $13 strike and adjustable strike price than buying two year, no-benefit LEAPS. It certainly took alot of balls for those guys to buy FFH LEAPS back then, but at the same time, they were using their own money. It would have been painful to lose that capital, but it would be harder to explain it to partners in a fund. We had no fund back in 2003, and I did buy quite a few LEAPS as well in my personal portfolio...not as many as Ericopoly, Uccmal or Indirect...but quite a bit. We only put a small amount of the portfolio in SNS LEAPS...about 6%...we made a killing in them. Anyone who bought OSTK LEAPS a couple of months ago would have done quite nicely too. But getting the timing right has a bit of luck involved, so you should be careful. Cheers!" Hi Sanjeev, I agree the timing has some luck involved but once the 2015 leaps come out in a couple of months, the only risk I see is the transactional cost of continuing to roll into longer leaps. If BAC isn't above 10 dollars a share in 2015 then the thesis was false in all likelihood for BAC, it seems to me.

It's possible the regulators only allow a modest buyback or dividend but not both. I sure hope Moynihan would buy back stock and not pay out a ten cent dividend. I'm sure by 2014 the regulators would allow a pretty substantial buyback and dividend by that time. Anyone worried Moynihan may go with the dividend if the regulators make him choose?

With the Europeans going on vacation in August, Soros' prediction of crisis coming to a head within 60 days, fiscal cliff and possible debt ceiling standoff in Nov, just curious what percentage everyone has in cash? Any comments on mr. Market becoming extremely bearish within next 60 days? I know a bit silly to predict such short term but I'll still pose the question.

Anyone know when Jan 2015 options are avail for JPM, BAC? I'm guessing within 2-4 weeks? Thanks

The wsj article quotes tilson as saying he will cut down on cnbc appearances and let performance speak for itself. I never understood why he regularly went on "Fast Money" that literally has positions for a day and has people argue to buy something because it went up. Why would he try and speak to that proile of investor? Wouldn't he want sticky capital?

I just lost my last post so this will be shorter. I'm trying to figure out why JPM is trading at 8x current earnings and 6.5 next year and trading less than tangible book while it has earned 15% return on tangible book past few years also I understand wells has less risk but I dont understand why it deserves a forward multiple at twice the level of JPM. Does anyone here have a strong argument why JPM should trade at this level besides the CIO division is a permanant concern and not transitory? Thanks

I freed up some cash to buy BAC and this week it has gone nothing but up, ugh. I'll continue to wait until it hits 7.40 or ideally below 7. Hopefully I won't be waiting like Godot.

Twacfa, Would you still make an investment in BAC (through b warrants or other equity tied component) if it dropped close to the price of Dec like you did last year? Or are you concerned enough about this potential capital raise to avoid BAC equity investment in the future? Or, stated another way, did you think about this in Dec but the probability was de minimus and thus you were still comfortable with the investment? Thanks for posting this thread. I think it is valuable to raise concerns for a popular i Security (at least on this board) Ericopoly, do you have any concerns on this issue? Thanks.

Ericopoly Thanks for your very informative posts on options. I have a basic options tax question, if someone buys 5 dollar calls12 months out and then exercises the options and continues to hold the stock, is that a taxable event? Is it different if the option is exercised less than 12 months? Thanks!

Ericopoly, Parsad, and any others, curious when you think BAC will receive approval from the fed to buyback shares? 10.7 billion shares, it would be great to start shrinking that number!

I'm surprised they sold at barely book value. In my opinion, they gave this company away. They should have gotten at least a 20% premium to book value. Anyway have any guesses for Sardar's next insurance target? I'm surprised he didn't have any cash to bid. Maybe he didn't want to own it outright. Or maybe we'll hear some ramblings for the low price the board received.

I just started buying BAC at $6.60 yesterday. I'm very aware it can drop further (and significantly so) but I don't see tangible book dropping more than $65 billion. BAC has $40 billion in loan loss reserves. They can write down another $70 billion to get to tangible equity of $65 billion. That is where the company is trading today. Normalized earnings is probably $2 a share. I think that can materialize by 2013. I know Wells is a better company but Wells isn't as cheap as BAC. I'm also not fond of management but I'm having a hard time of seeing how one doesn't make a lot of money if they buy at $6.50 and below. I'm thinking of buying a large chunk if it drops below $5. I understand they may have to issue stock to raise capital but they still have the China Construction asset plus dilution probably wouldn't lower the upside by much more than $2 a share. Feel free to disagree or argue any of the above isn't what will happen in a probable scenario.

Ragnar Thanks for the post. One question, on the 13d there are parenthesis around share numbers above 50 which denotes sales and they are removed below 50. Does this mean Biglari sold short above 50 and changed his mind and started buying around 48 (and lower)? Thanks!

"The biggest argument I can give you to why macro is irrelevant...Mohnish put in $100K into PIF I in 1999, and today his stake is worth $50M...that's after losing 70% in 2008 and 2009, and then rebounding from the lows in 2010. Macro doesn't matter to the degree many people are speculating. Find good businesses, invest in them at great prices and build them for the long-term. Cheers!" No offense Sanjeev, but I think Mohnish is not being truthful to you. The way you frame that statement is he didn't add to the account. If you plug those numbers in over an 11 year time frame 99-10, the average annualized return is 75.93% AFTER tax! Do you really believe Mohnish? If you can provide audited numbers, I stand corrected and I apologize for doubting him.