txlaw

No, the bull case is that regardless of whether there is a capital infusion, BAC won't go to $0 and is worth far more than what it is trading at. Keep in mind that there are multiple entities involved here. The Countrywide entity is the one that's causing the most problems. I'm not exactly sure that Moynihan would actually take a preferred investment akin to the BRK-GS transaction, but because financial institutions rely on confidence, he may very well do so, provided that he gets the capital on decent terms. We'll see what happens.

So you would characterize BofA's direct response to Blodget's numbers, which they say are orders of magnitude off the mark, as platitudes? Mr. Blodget is making “exaggerated and unwarranted claims,” which is what the SEC stated publicly when he was permanently banned from the securities industry in 2003. The sovereign exposure is off by a factor of 10. The commercial real estate figures are off by a factor of four. The mortgage analysis was provided by a hedge fund that has acknowledged it will benefit if our stock price declines. The blogger's recommendations on goodwill accounting would be prohibited by generally acceptable accounting practices. Traditional bank valuation relies upon tangible book value per share, which excludes by definition 100 percent of goodwill and other intangibles. As of June 30, our tangible book value per share was $12.65. They probably shouldn't have put the part in about the ban on Blodget, but I get their frustration. By the way, weren't you the guy who was claiming that that BAC's share price has an affect on BofA's capital position? Also, you need to look up the definition of "platitudes."

Totally agree. KIC has stated that they are considering investing an additional $50 M in BAC. I wouldn't be surprised if a syndicate of sovereign wealth funds try to push a preferred deal a la the BRK-GS deal.

Same. I have 2 on order from HP, hopefully they ship..... Crossing my fingers.

Wrong thread, Alert.

I'm not sure I understand this. I mean, I get why the CDS spread and the interest rates for the underlying credits would move in the same direction. But why is it the case that the corporate bond market actually prevents CDS spreads from getting out of whack on a temporary basis? Is it because there is some sort of rapid arbitrage going on? Does anyone who has actually traded a CDS want to chime in?

Darn. Yeah, my B&N TouchPad order got cancelled.

Here's something I've been wondering since the financial crisis. Does activity in the CDS market affect the way that the underlying credit's common stock trades because the CDS market is used as an input in the algorithms used by HFT firms? Bond traders seem to believe that the CDS market is smarter than the stock market. If that is the case, it seems probable that any movement in the CDS market would be incorporated into the algorithmic trading of equities. The follow up question is how liquid is the CDS market, and is it possible to cause wild swings for a particular credit using a small amount of money in favor of a much larger long or short equity position by exploiting any linkages between the CDS market and the stock market? Does anyone have any insight on this? This is a legit question, btw -- I'm not a conspiracy theorist by any stretch of the imagination.

Barnes & Noble website has the 16 GB TouchPad for $102. Just bought one. http://gifts.barnesandnoble.com/HP-TouchPad-Tablet-with-16GB-Memory-WiFi-12GHz-Black/e/886111788637

Debate over tax reform. Definitely worth watching. http://www.charlierose.com/view/interview/11847

Wow, you are joining a great team! Congrats, Tariq.

I wish! Maybe some day.. Me too.

Just watched the interview. It was one of the best I've seen of him in a while.

aww fuck. You know what's going to happen next, right? Nah. It's not gonna happen. I'll gladly eat crow if they do. I mean, BAC is going into BK? Not bloody likely. Already posted this on another thread, but it probably fits here better. http://dealbook.nytimes.com/2011/08/11/for-bank-of-america-countrywide-bankruptcy-is-still-an-option/

Interesting article on BAC's exposure to Countrywide liabilities: http://dealbook.nytimes.com/2011/08/11/for-bank-of-america-countrywide-bankruptcy-is-still-an-option/

Mr. Watsa, who has become a fan of Japanese economist Richard Koo, also believes that the Obama administration and U.S. Congress could be making a fatal error by cutting spending. “The worry is this,” Mr. Watsa said. “You have interest rates at zero per cent, you have had deficits coming down, meaning reduced government spending, which means there’s no ammo left for the governments of the world, particularly the United States. So what do you do next to get the economy going?” Ha! I thought that HWIC was paying attention to Richard Koo. These guys are just so darn rational. If I didn't want to manage my own portfolio, I'd put a large chunk of my portfolio in FFH.

You mentioned several ways to play this one... do you mind me asking which option(s) you ultimately went with? I went with AIG & BAC warrants. I also got BAC 2013 $10 strike calls. No AIG. But bought the same calls on BAC that you did.

14$ stock $4 net in cash $2-2,2 EPS inside ownership of 15% + great management changed business Probably worth a double yes. :) We'll do all right. ;D

:D He also bought over $200 Million in DELL when it was in the $20's. Following Michael Dell's purchased has been a recipie for disaster over the last several years. It's worth more than $20. I am very confident about that. The point is that DELL is cheap, not to follow anyone in. I think I've had to tell you that multiple times.

Since we've focused on the financials so much, I'll say DELL.

I'm convinced, though, that BAC deposits are gonna go up markedly this quarter.

DELL is now around where Michael Dell made his $150 million purchase.

aww fuck. You know what's going to happen next, right? Nah. It's not gonna happen. I'll gladly eat crow if they do. I mean, BAC is going into BK? Not bloody likely.

Haha. So true.

BAC just told CNBC that they do not need to raise capital.