Cardboard Posted December 22, 2011 Posted December 22, 2011 I got compelled to buy in today! Cardboard
Parsad Posted December 22, 2011 Posted December 22, 2011 Well you also bought Fairfax below $100, so it could go either way! ;D Cheers!
Vizi1 Posted December 22, 2011 Posted December 22, 2011 Cardboard, I've been watching BAC as well, but haven't pulled the trigger. Just wondering what compelled you today as opposed to anytime earlier this week? I almost pulled the trigger on Tuesday, but then got pulled away due to other work demands. Maybe there is no reason why today was special, I'm just wondering if you would be willing to offer any insight into your decision to buy today specifically. Cheers Vizi
Cardboard Posted December 22, 2011 Author Posted December 22, 2011 Well, I have been looking at it for a long time. I would say that I thought more and more about it over the past 2 weeks. I got especially interested when it did hit $5 since it was the only one of the U.S. financials that I follow hitting a new low. The gap to intrinsic value compared to the others now just seemed too wide. Honestly, I should have bought right around $5 since I could. I guess that seeing more positive U.S. data this week, a "favourable" settlement and the realization that buying such a franchise in a business that is likely to look similar in 20 years from now at such discount can't come too often. Buying at $5.40 vs $5 makes me feel a bit foolish, but if I am right and many here, this $0.40 will look trivial in not that long. Cardboard
Parsad Posted December 22, 2011 Posted December 22, 2011 Buying at $5.40 vs $5 makes me feel a bit foolish, but if I am right and many here, this $0.40 will look trivial in not that long. And that's the perspective you need to have. You are buying it less than 40% of tangible book, let alone book. If it gets anywhere near tangible book, then you've made a 150% gain. I suspect it should trade at tangible book sometime next year. Cheers!
Vizi1 Posted December 22, 2011 Posted December 22, 2011 Buying at $5.40 vs $5 makes me feel a bit foolish, but if I am right and many here, this $0.40 will look trivial in not that long. And that's the perspective you need to have. You are buying it less than 40% of tangible book, let alone book. If it gets anywhere near tangible book, then you've made a 150% gain. I suspect it should trade at tangible book sometime next year. Cheers! Agreed and much appreciated. Happy Holidays.
PlanMaestro Posted December 22, 2011 Posted December 22, 2011 Hey I even bought yesterday some of those B warrants. Some people never learn that the first rule is never to lose money.
ERICOPOLY Posted December 22, 2011 Posted December 22, 2011 I have far too much upside concentrated in BAC. You should all just get out now.
racemize Posted December 22, 2011 Posted December 22, 2011 Now I'm starting to feel foolish for only a 3% position.
Uccmal Posted December 22, 2011 Posted December 22, 2011 Now I'm starting to feel foolish for only a 3% position. Don't follow the crowd! It's obviously going to go down now. lol. I have been growing my position all fall, slowly. Combination of Leaps and warrants. 5-7% total assets. Berkowitz thought this was a deal in the mid teens.
txlaw Posted December 22, 2011 Posted December 22, 2011 Cardboard, did you buy common or the TARP warrants?
Valuebo Posted December 23, 2011 Posted December 23, 2011 I feel ashamed for even thinking about adding to my position given how big it has become in relation to my other holdings. :-X Must resist...!
txlaw Posted December 23, 2011 Posted December 23, 2011 I feel ashamed for even thinking about adding to my position given how big it has become in relation to my other holdings. :-X Must resist...! Second largest position for me after MBI. Both positions dwarf my other holdings, although JEF comes a distant third.
Guest misterstockwell Posted December 23, 2011 Posted December 23, 2011 You are buying it less than 40% of tangible book, let alone book. If it gets anywhere near tangible book, then you've made a 150% gain. I suspect it should trade at tangible book sometime next year. Cheers! I am curious--what has tangible book done over the last 5 or 10 years? Is there a table somewhere listing that? Is the trend still down?
Valuebo Posted December 23, 2011 Posted December 23, 2011 I feel ashamed for even thinking about adding to my position given how big it has become in relation to my other holdings. :-X Must resist...! Second largest position for me after MBI. Both positions dwarf my other holdings, although JEF comes a distant third. It's my largest holding together with LUK and C. I only have 7 positions so I can't really afford to add more at this point. :P At some point you have to take a full position and just wait it out I guess. tombgrt: These are the times that test us to be great investors. I only own the common, and keep adding to the common! We are talking about double digit yield on the dividends alone if they restore them and they grow, just imagine... Add a buyback and economic growth. BAC is one of those opportunities we may be reading about in the forseeable future. At this very moment provided there is no self destruction in the financial system, we could be highly rewarded. I agree completely. ;) Like Berkowitz has said in the past "Later I'll feel stupid for not buying more." (paraphrasing) I'll be taxed 46,5% or something on the dividends (Belgium) so don't expect words of praise from me there, I prefer the buybacks as long as we trade under (T)BV. ;D
Parsad Posted December 23, 2011 Posted December 23, 2011 I am curious--what has tangible book done over the last 5 or 10 years? Is there a table somewhere listing that? Is the trend still down? If I worried about trends, then I would never have bought Berkshire B's 12 years ago at $1,400, Fairfax 8 years ago at less than $125, Steak'n Shake 3 years ago at a post-split $80, or Bank of America today at $5.35. Instead, I would have bought Nortel at $110, Sears at $130, Research In Motion at $60, and Salesforce.com at $135. I like my picks instead! ;D Cheers!
Guest misterstockwell Posted December 23, 2011 Posted December 23, 2011 I am curious--what has tangible book done over the last 5 or 10 years? Is there a table somewhere listing that? Is the trend still down? If I worried about trends, then I would never have bought Berkshire B's 12 years ago at $1,400, Fairfax 8 years ago at less than $125, Steak'n Shake 3 years ago at a post-split $80, or Bank of America today at $5.35. Instead, I would have bought Nortel at $110, Sears at $130, Research In Motion at $60, and Salesforce.com at $135. I like my picks instead! ;D Cheers! It makes a difference when you say "If it gets anywhere near tangible book, then you've made a 150% gain". If tangible book comes down to meet price rather than price moving up to current tangible book, the story changes drastically.
Valuebo Posted December 23, 2011 Posted December 23, 2011 TBV is actually up 31 cents YoY. BV has dropped 37 cents YoY. I wouldn't be suprised to see TBV actually going up in 2012 as earnings start to shine through.
returnonmycapital Posted December 23, 2011 Posted December 23, 2011 I agree, follow TBV as a proxy for the operating health of the underlying business. Goodwill still includes Countrywide/ML froth and is probably materially overstated.
dcollon Posted December 23, 2011 Posted December 23, 2011 Attached are some of the numbers over the last 20 qtrs.BAC_last_20_qtrs.xls
PlanMaestro Posted December 23, 2011 Posted December 23, 2011 I agree, follow TBV as a proxy for the operating health of the underlying business. Goodwill still includes Countrywide/ML froth and is probably materially overstated. Surprising how TBV per share has basically stayed the same since 2006 at $12.2. All these noise and movement all these years while capital/value has stayed the same. PTPP per share is also not much different from 2006.
Guest misterstockwell Posted December 23, 2011 Posted December 23, 2011 Thanks dcollon. Looking at the 10-Q, there are at least 1.5 billion more shares outstanding than in the spreadsheet. Tangible book is more like 10.25 a share once you start converting preferreds and warrants and such.Still a long way from 5.40 though
Guest misterstockwell Posted December 23, 2011 Posted December 23, 2011 Maybe warrants, but Buffetts 700 million shares convert far below tangible book. I am not sure about the other preferreds
moore_capital54 Posted December 23, 2011 Posted December 23, 2011 Maybe warrants, but Buffetts 700 million shares convert far below tangible book. I am not sure about the other preferreds the obsession with tangible book is transitory. someday US Trust Merrill Lynch will be valued at ~ 2 x TB. Someday the deposit gathering system will be worth more than tangible book. So this obsession with tangible book is really a ZH/CW "phenomenon" that will someday not matter. It's a function of confidence. Well said!
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