bmichaud Posted January 23, 2012 Posted January 23, 2012 Tremendously helpful Parsad. Thanks a lot. bmichaud, I honestly think that circa 2005 the downside for FFH was zero. A repeat of 911 would have toasted them. As it was they had to raise equity at below book, two years in a row and sell off substantial parts of their healthiest business. Lsongleaf held 25% of Ffh, BUT it never made up 25% of the longleaf portfolio. The MOS for me was in the Leaps As Eric mentions. 10-15% of my portfolio would have gone to zero in a worst case. The downside for Bac is definitely not zero. The retail banking arm in itself must be worth at least $7 in a fire sale. Uccmal - great point here. In thinking about it more last night, the fact that earning power after cost reductions is more in the realm of $2 per share would support tangible book value per share somewhere between actual BVPS and tangible BVPS. Thus in a liquidation scenario, the SOTP would probably be higher than current prices.
rranjan Posted January 23, 2012 Posted January 23, 2012 yes, there can be circumtances where they can get wiped out and you lose everything so position sizing should be based on how much comfortable you feel. Personally I think this is a low risk investment with very high probability of doubling in next 6 to 18 months. So my position is likewise humongous. I still drive my car most days even though I've heard reports that people get horribly mangled in these things. I take mortal risks every day. It became my largest position when Warrants were trading in 2-2.20 range. I never get lucky with timing so it's too early. I also bought some 2014 calls. Obviously, I don't think that risk of getting wiped out is high here but if someone is worried about doomsday scenario then not only BAC but most investments will perform poorly. BAC still needs to continue improving their capital structure and I think they will do so. You are right about driving example but this probabilistic approach does not suite everyone when it comes to investment even though it's a right way to think. I think it's important for everyone to understand their comfort level and stick to that. Just my opinion.
Parsad Posted January 23, 2012 Posted January 23, 2012 Moynihan is looking at another $3B in cuts. Cheers! http://www.bloomberg.com/news/2012-01-23/bofa-targets-up-to-3b-in-additional-cuts.html?cmpid=yhoo
ERICOPOLY Posted January 23, 2012 Posted January 23, 2012 Obviously, I don't think that risk of getting wiped out is high here but if someone is worried about doomsday scenario then not only BAC but most investments will perform poorly. Yup, that's why I'm not diversified. BAC is not a black box by the way -- it's gold.
Uccmal Posted January 24, 2012 Posted January 24, 2012 I just picked up a pile more bac jan.2013 10 strike calls for..... 0.50
ERICOPOLY Posted January 25, 2012 Posted January 25, 2012 I just picked up a pile more bac jan.2013 10 strike calls for..... 0.50 I already have some. I'm sort of amazed that they are going for so little.
hyten1 Posted January 25, 2012 Posted January 25, 2012 hmm how did you get it so low? its at $1 now my bad i was looking at jan 14 :)
sswan11 Posted January 25, 2012 Posted January 25, 2012 Yes, but the 13s got to .21 on December 28 - less than a month ago! - and the 14s to around .64. 10strike still way out of the money but if one is confident BAC will be greater than >10 come Jan13 an interesting (if risky) bet...
ERICOPOLY Posted January 26, 2012 Posted January 26, 2012 From the CC transcript: Our period end FTE is down about 7,000 people in the fourth quarter compared to the third quarter. This is over and above the 2,500 people we added in this quarter for our legacy asset services. - Moynihan This means they are already (in one quarter) 31.6% done with phase I of New BAC head count reduction. Any hints on when the next big purge is?
CONeal Posted January 26, 2012 Posted January 26, 2012 Historically speaking there should be a wave around the middle of Feb.
Rabbitisrich Posted January 26, 2012 Posted January 26, 2012 On the question of corporate culture (including underwriting and risk management) I think that you have to make a sort of top down judgement. The last CEO has been widely lampooned as a doofus, even pilloried by Buffett in the promotion of "Too Big To Fail"; executives were called to congress and fcic meetings; the media scrounged for any sign of excess; Basel III and Dodd-Frank forced profit center managers to avoid risk and volatility; and rules of thumb regarding collateral (housing moves up and doesn't greatly affect CRE collateral) imploded. The recession slapped handcuffs on the optimists.
berkshiremystery Posted January 27, 2012 Posted January 27, 2012 Brian Moynihan at Davos: BofA Can Make a Lot More with Bloomberg Video January 27, 2012, 9:50 AM http://blogs.wsj.com/deals/2012/01/27/brian-moynihan-at-davos-bofa-can-make-a-lot-more/?mod=yahoo_hs
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now