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BAC Investor Poll


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Respected members of the forum, what are your current thoughts on BAC?  

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  1. 1. Respected members of the forum, what are your current thoughts on BAC?

    • Absolutely shocked it has gone this low, continue to add to my position, Mr. Market is wrong!
    • At $56B market cap, there is now sufficient margin of safety baked in for me to build a position.
    • I am of the opinion that BAC is cheap, but there are better risk adjusted opportunities in the market given the recent declines.
    • Something is wrong, and Mr. Market is right.
    • I am of the view that post Lehman, a value investor cannot effectively analyse a financial stock.


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An interesting article:

 

http://blogs.wsj.com/marketbeat/2011/11/22/fed-unveils-new-stress-test-plan/?mod=yahoo_hs

 

This paragraph caught my eye:

 

The central bank said it “will approve dividend increases or other capital distributions only for companies whose capital plans are approved by supervisors and are able to demonstrate sufficient financial strength” to withstand a time of market stress.

 

When the stress tests are complete, the Fed said it will publicly disclose its estimates of bank revenue and losses and estimates of bank capital ratios for the 19 largest firms.

 

Correct me if I am wrong but is this not the first time we have heard this tone from the fed? That they are willing to consider dividends or buybacks?

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Tue Nov 22, 2011 4:14pm EST

Nov 22 (Reuters) - Bank of America Corp has reached a settlement with former Countrywide Financial Corp institutional investors who decided not to join a $624 million class-action case that won court approval in February.

 

The terms of the accord were not disclosed in a filing in U.S. District Court for the Central District of California that was dated Monday. Countrywide's former auditor KPMG was not part of the pact, according to the filing.

 

Blackrock Inc , the California Employees' Retirement System (CalPERS) and other investors in July filed a lawsuit that alleged Countrywide and its top leaders perpetrated fraud "in a quest to triple Countrywide's market share and enrich themselves at the expense" of investors. Bank of America acquired the former sub-prime lender on July 1, 2008.

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Correct me if I am wrong but is this not the first time we have heard this tone from the fed? That they are willing to consider dividends or buybacks?

 

This time I expect that BAC gets the approval.  They've been hitting the gym the past few months trying to get in shape for this.

 

There were probably given a cheat sheet to study.  After all, it's in everyone's interests to help them pass with flying colors.  It would be a positive sign of confidence in the banking system -- help weaken some rumors.

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Correct me if I am wrong but is this not the first time we have heard this tone from the fed? That they are willing to consider dividends or buybacks?

 

This time I expect that BAC gets the approval.  They've been hitting the gym the past few months trying to get in shape for this.

 

There were probably given a cheat sheet to study.  After all, it's in everyone's interests to help them pass with flying colors.  It would be a positive sign of confidence in the banking system -- help weaken some rumors.

 

No, I don't think just yet.  BAC's litigation overhang means that it has to be better capitalized than its peers to allow dividends or buybacks.  I think WFC, JPM will get the greenlight.  Possibly C, but their European exposure may mean a little longer. 

 

And I disagree totally with the comment by MisterStockwell that it is a total blackhole.  At these prices, BAC may be one of the cheapest and misunderstood stocks I have seen since Fairfax at $57.  Actually, BAC outside of the litigation, is in significantly better shape than Fairfax was at $57 with losses still ahead of them.  BAC has put much of their losses behind and will drag litigation out for years if settlements aren't in their favor.  As I said, I find it incredibly hard to see how BAC will not trade at a slight discount to tangible book within a year or two, and at book value at some point within the next 3-4 years.  Outrageously cheap in my opinion...just plain stupid!  Cheers!   

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Correct me if I am wrong but is this not the first time we have heard this tone from the fed? That they are willing to consider dividends or buybacks?

 

This time I expect that BAC gets the approval.  They've been hitting the gym the past few months trying to get in shape for this.

 

There were probably given a cheat sheet to study.  After all, it's in everyone's interests to help them pass with flying colors.  It would be a positive sign of confidence in the banking system -- help weaken some rumors.

 

No, I don't think just yet.  BAC's litigation overhang means that it has to be better capitalized than its peers to allow dividends or buybacks.  I think WFC, JPM will get the greenlight.  Possibly C, but their European exposure may mean a little longer. 

 

And I disagree totally with the comment by MisterStockwell that it is a total blackhole.  At these prices, BAC may be one of the cheapest and misunderstood stocks I have seen since Fairfax at $57.  Actually, BAC outside of the litigation, is in significantly better shape than Fairfax was at $57 with losses still ahead of them.  BAC has put much of their losses behind and will drag litigation out for years if settlements aren't in their favor.  As I said, I find it incredibly hard to see how BAC will not trade at a slight discount to tangible book within a year or two, and at book value at some point within the next 3-4 years.  Outrageously cheap in my opinion...just plain stupid!  Cheers! 

 

Pretty much agree with everything you just said, though it does seem they are trying to get to that point where they are better capitalized than their peers at a much faster rate now.

 

 

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Correct me if I am wrong but is this not the first time we have heard this tone from the fed? That they are willing to consider dividends or buybacks?

 

This time I expect that BAC gets the approval.  They've been hitting the gym the past few months trying to get in shape for this.

 

There were probably given a cheat sheet to study.  After all, it's in everyone's interests to help them pass with flying colors.  It would be a positive sign of confidence in the banking system -- help weaken some rumors.

 

No, I don't think just yet.  BAC's litigation overhang means that it has to be better capitalized than its peers to allow dividends or buybacks.  I think WFC, JPM will get the greenlight.  Possibly C, but their European exposure may mean a little longer. 

 

And I disagree totally with the comment by MisterStockwell that it is a total blackhole.  At these prices, BAC may be one of the cheapest and misunderstood stocks I have seen since Fairfax at $57.  Actually, BAC outside of the litigation, is in significantly better shape than Fairfax was at $57 with losses still ahead of them.  BAC has put much of their losses behind and will drag litigation out for years if settlements aren't in their favor.  As I said, I find it incredibly hard to see how BAC will not trade at a slight discount to tangible book within a year or two, and at book value at some point within the next 3-4 years.  Outrageously cheap in my opinion...just plain stupid!  Cheers! 

 

I don't think the litigation overhang will affect the results of their stress tests.  The accounting value of a contingent claim that can't be estimated accurately is generally zero.  Ergo: no impact on a stress test.  :)

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I think Moynihan said as much during the let conferece call, or during the BB interview.  Since he likely talks to his regulators frequently I am certain he is going to keep saying no dividend until he hears otherwise. 

 

I polled number one even though I am not really shocked and hold enough BAC today.  I added some Jpm recently - 2014 leaps.  WFC, JPM, BAC are all equally cheap relative to their risks.

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Correct me if I am wrong but is this not the first time we have heard this tone from the fed? That they are willing to consider dividends or buybacks?

 

This time I expect that BAC gets the approval.  They've been hitting the gym the past few months trying to get in shape for this.

 

There were probably given a cheat sheet to study.  After all, it's in everyone's interests to help them pass with flying colors.  It would be a positive sign of confidence in the banking system -- help weaken some rumors.

 

No, I don't think just yet.  BAC's litigation overhang means that it has to be better capitalized than its peers to allow dividends or buybacks.  I think WFC, JPM will get the greenlight.  Possibly C, but their European exposure may mean a little longer. 

 

And I disagree totally with the comment by MisterStockwell that it is a total blackhole.  At these prices, BAC may be one of the cheapest and misunderstood stocks I have seen since Fairfax at $57.  Actually, BAC outside of the litigation, is in significantly better shape than Fairfax was at $57 with losses still ahead of them.  BAC has put much of their losses behind and will drag litigation out for years if settlements aren't in their favor.  As I said, I find it incredibly hard to see how BAC will not trade at a slight discount to tangible book within a year or two, and at book value at some point within the next 3-4 years.  Outrageously cheap in my opinion...just plain stupid!  Cheers! 

 

I don't think the litigation overhang will affect the results of their stress tests.  The accounting value of a contingent claim that can't be estimated accurately is generally zero.  Ergo: no impact on a stress test.  :)

 

But don't you think the regulators will consider litigation risks even if they do not affect the balance sheets for reporting purposes?

 

If I were a financial regulator, I would certainly have a more robust test that looks behind the FASB standards for recognizing contingent claims (whatever they may be).

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Correct me if I am wrong but is this not the first time we have heard this tone from the fed? That they are willing to consider dividends or buybacks?

 

This time I expect that BAC gets the approval.  They've been hitting the gym the past few months trying to get in shape for this.

 

There were probably given a cheat sheet to study.  After all, it's in everyone's interests to help them pass with flying colors.  It would be a positive sign of confidence in the banking system -- help weaken some rumors.

 

No, I don't think just yet.  BAC's litigation overhang means that it has to be better capitalized than its peers to allow dividends or buybacks.  I think WFC, JPM will get the greenlight.  Possibly C, but their European exposure may mean a little longer. 

 

And I disagree totally with the comment by MisterStockwell that it is a total blackhole.  At these prices, BAC may be one of the cheapest and misunderstood stocks I have seen since Fairfax at $57.  Actually, BAC outside of the litigation, is in significantly better shape than Fairfax was at $57 with losses still ahead of them.  BAC has put much of their losses behind and will drag litigation out for years if settlements aren't in their favor.  As I said, I find it incredibly hard to see how BAC will not trade at a slight discount to tangible book within a year or two, and at book value at some point within the next 3-4 years.  Outrageously cheap in my opinion...just plain stupid!  Cheers! 

 

I don't think the litigation overhang will affect the results of their stress tests.  The accounting value of a contingent claim that can't be estimated accurately is generally zero.  Ergo: no impact on a stress test.  :)

 

But don't you think the regulators will consider litigation risks even if they do not affect the balance sheets for reporting purposes?

 

If I were a financial regulator, I would certainly have a more robust test that looks behind the FASB standards for recognizing contingent claims (whatever they may be).

 

Perhaps, but the reason for doing a public stress test is not really to toss out bad apples, but to reassure the market.  :)

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Correct me if I am wrong but is this not the first time we have heard this tone from the fed? That they are willing to consider dividends or buybacks?

 

This time I expect that BAC gets the approval.  They've been hitting the gym the past few months trying to get in shape for this.

 

There were probably given a cheat sheet to study.  After all, it's in everyone's interests to help them pass with flying colors.  It would be a positive sign of confidence in the banking system -- help weaken some rumors.

 

No, I don't think just yet.  BAC's litigation overhang means that it has to be better capitalized than its peers to allow dividends or buybacks.  I think WFC, JPM will get the greenlight.  Possibly C, but their European exposure may mean a little longer. 

 

And I disagree totally with the comment by MisterStockwell that it is a total blackhole.  At these prices, BAC may be one of the cheapest and misunderstood stocks I have seen since Fairfax at $57.  Actually, BAC outside of the litigation, is in significantly better shape than Fairfax was at $57 with losses still ahead of them.  BAC has put much of their losses behind and will drag litigation out for years if settlements aren't in their favor.  As I said, I find it incredibly hard to see how BAC will not trade at a slight discount to tangible book within a year or two, and at book value at some point within the next 3-4 years.  Outrageously cheap in my opinion...just plain stupid!  Cheers! 

 

I don't think the litigation overhang will affect the results of their stress tests.  The accounting value of a contingent claim that can't be estimated accurately is generally zero.  Ergo: no impact on a stress test.  :)

 

But don't you think the regulators will consider litigation risks even if they do not affect the balance sheets for reporting purposes?

 

If I were a financial regulator, I would certainly have a more robust test that looks behind the FASB standards for recognizing contingent claims (whatever they may be).

 

Perhaps, but the reason for doing a public stress test is not really to toss out bad apples, but to reassure the market.  :)

 

Haha, very true.  :D

 

I think it's pretty likely that BAC passes the stress test, for the reason you just pointed out.  Whether they get to resume the dividend at the same time as a WFC or JPM is another matter.

 

Bring on the stress test!

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I am signing off for the day but just wanted to thank everyone for the participation. It appears that so far, 80% of this board has long exposure to BAC and believes Mr. Market is wrong.

 

Has this board ever been wrong collectively since its inception?

 

I have only been following for the last 2 years and have been a member for the last few months, my take is that for the most part the board has been a very good indicator of value.

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I am signing off for the day but just wanted to thank everyone for the participation. It appears that so far, 80% of this board has long exposure to BAC and believes Mr. Market is wrong.

 

Has this board ever been wrong collectively since its inception?

 

I have only been following for the last 2 years and have been a member for the last few months, my take is that for the most part the board has been a very good indicator of value.

 

Sino Forest the majority on this board might have been wrong, although I don't think too many were long. If not it was close.

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Has this board ever been wrong collectively since its inception?

 

Not on anything that I have been long on and the board agreed.  ;D 

 

Sino Forest the majority on this board might have been wrong. If not it was close.

 

Did not touch Sino Forest.  I also disagree with the fact that the majority liked the stock.  I would say the majority did not touch the stock, and that they disliked Muddy Waters methods.  It was a minority of boardmembers who actually took a solid position either long or short the stock.  The majority stayed on the sidelines. 

 

I have only been following for the last 2 years and have been a member for the last few months, my take is that for the most part the board has been a very good indicator of value.

 

You are correct on this, but this will only last for some time.  Eventually, over many years, the board will get large enough where it will start to track the psychological behavior of the broader market.  I would say it has shown indications of this at a lesser level in recent years actually.  The board's ideas were very contrarian in the past when much smaller.  Even now, some ideas like BAC had little support just a few months ago, so some broad emotional and psychological biases will appear.  Cheers!

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Whether they get to resume the dividend at the same time as a WFC or JPM is another matter.

 

At current prices, JPM is already yielding over 10% if you count buybacks.

 

They've on track to return more than $10b to shareholders this year.

 

 

The company increased its quarterly dividend to $0.25 from $0.05 per share and set plans to buy back $8 billion in stock this year as part of a $15 billion stock buyback program.

 

http://www.mysmartrend.com/news-briefs/news-watch/jpmorgan-chase-topped-q1-estimates-plans-15b-buyback-program-jpm

 

 

 

 

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Whether they get to resume the dividend at the same time as a WFC or JPM is another matter.

 

At current prices, JPM is already yielding over 10% if you count buybacks.

 

They've on track to return more than $10b to shareholders this year.

 

 

The company increased its quarterly dividend to $0.25 from $0.05 per share and set plans to buy back $8 billion in stock this year as part of a $15 billion stock buyback program.

 

http://www.mysmartrend.com/news-briefs/news-watch/jpmorgan-chase-topped-q1-estimates-plans-15b-buyback-program-jpm

 

Good point. 

 

WFC has also been buying back shares and yields more than the 10-year.

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And JPM got the green light for that behavior when they were at about 7% under Basel III.

 

So we'll see what happens when BAC hits that level in 2012.  The two banks are roughly the same in size.  If BAC got just 1/2 of that approval level it would be a 10% yield on current share price.

 

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And JPM got the green light for that behavior when they were at about 7% under Basel III.

 

So we'll see what happens when BAC hits that level in 2012.  The two banks are roughly the same in size.  If BAC got just 1/2 of that approval level it would be a 10% yield on current share price.

 

Man, I'd love to see the strike price on the warrants start to drop at that level so soon. 

 

Best not to get too hopeful yet, but hey we'll see what happens.

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It's relatively harder (compared to C or JPM) to figure out BAC's progress on getting to 7% under Basel III because BAC doesn't like to discuss it in their presentations.  This suggests an inferiority complex and they want desperately to get to that level soon for the headline effect.  Or maybe it doesn't -- perhaps they just like to make us work harder.

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Guest misterstockwell

It's relatively harder (compared to C or JPM) to figure out BAC's progress on getting to 7% under Basel III because BAC doesn't like to discuss it in their presentations.  This suggests an inferiority complex and they want desperately to get to that level soon for the headline effect.  Or maybe it doesn't -- perhaps they just like to make us work harder.

 

Or perhaps they just don't know

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