Parsad Posted February 16, 2012 Posted February 16, 2012 Has anyone confirmed with their accountant that common stock adjustment of the warrants results in a taxable gain on the year of adjustment? I don't think you would recognize the gain on the common stock exercise price decreasing in any given year. When you exercise the warrant, your cost basis adjusts to the exercise price on that day, plus your original warrant cost. The difference between that total cost and the market price of the stock is your gain or loss. For example, say the exercise price is $12 and you paid $3 for the warrant...total cost is $15. The day you exercise the warrant, the stock is at $25. Your gain is $10. You don't recognize the decrease in the warrant exercise price except on the day you exercise. The annual adjustment to the exercise price goes through the bank's P&L statement and is incurred by them. If I'm wrong here, maybe our CPA friends on the board can correct me. Cheers!
Rabbitisrich Posted February 16, 2012 Posted February 16, 2012 Parsad, I'm looking at the risk factor on S-16 of the BAC A prospectus: The number of shares of our common stock underlying the warrants and the exercise price of the warrants are subject to adjustment in certain circumstances. To the extent any such adjustment or failure to adjust results in an increase in your proportionate interest in our assets or our earnings and profits, you will be deemed to have received for U.S. federal income tax purposes a taxable dividend to the extent deemed paid out of our earnings and profits without the receipt of any cash. The paragraph appears again on S-36/37. The A Warrants (I've only checked this prospectus) increases warrant holder share in the event of a dividend. It reduces the strike price, then adjusts the warrant shares by the ratio of the old strike to the new strike.
Parsad Posted February 16, 2012 Posted February 16, 2012 Parsad, I'm looking at the risk factor on S-16 of the BAC A prospectus: The number of shares of our common stock underlying the warrants and the exercise price of the warrants are subject to adjustment in certain circumstances. To the extent any such adjustment or failure to adjust results in an increase in your proportionate interest in our assets or our earnings and profits, you will be deemed to have received for U.S. federal income tax purposes a taxable dividend to the extent deemed paid out of our earnings and profits without the receipt of any cash. The paragraph appears again on S-36/37. The A Warrants (I've only checked this prospectus) increases warrant holder share in the event of a dividend. It reduces the strike price, then adjusts the warrant shares by the ratio of the old strike to the new strike. Yeah Rabbit, after reading that, it looks like any adjustment would be deemed a taxable dividend. They would issue a 1099 to the shareholder I assume. Cheers!
gordoffh Posted February 17, 2012 Posted February 17, 2012 Top pick on BNN. Like the target price Bank of America (BAC NYSE) Bought August 2011 at $6.76. Bank of America still has lots of tough slogging ahead. Recent legal settlements will likely send the company back into the red and demands of regulators are always uncertain. Fortunately the bank had already reserved $11.8 billion for the recent mortgage settlement. However, the company has made major steps in its turnaround and recently five of the six divisions have been profitable. Insiders have been buying. Target price: $38.74
redskin Posted February 17, 2012 Posted February 17, 2012 We see absolutely no reason to take any BAC off the table, fundamentally the situation continues to improve if anything we may even add to our position on this pullback. The next event to look forward to is the stress test, and possibly guidance on dividend or buybacks. I don't see any chance of a US recession when Bernanke has his hand on the trigger of another round of QE targeted at MBS. The smart money is buying nonrated MBS as we speak, including Kyle Bass. These are gonna rock and roll when the fed buys agency MBS with newly created money. That will also mark the housing bottom as we know it. This pullback should it continue, presents a fantastic averaging up opportunity. Unfortunately, BAC has indicated they are not going to request to buyback shares. I don't understand this at all.
Parsad Posted February 17, 2012 Posted February 17, 2012 We see absolutely no reason to take any BAC off the table, fundamentally the situation continues to improve if anything we may even add to our position on this pullback. The next event to look forward to is the stress test, and possibly guidance on dividend or buybacks. I don't see any chance of a US recession when Bernanke has his hand on the trigger of another round of QE targeted at MBS. The smart money is buying nonrated MBS as we speak, including Kyle Bass. These are gonna rock and roll when the fed buys agency MBS with newly created money. That will also mark the housing bottom as we know it. This pullback should it continue, presents a fantastic averaging up opportunity. Unfortunately, BAC has indicated they are not going to request to buyback shares. I don't understand this at all. If you don't ask, then you don't have to tell the world they said "no". I think Moynihan knows that it is 50/50 that they would be granted the chance to buy back shares or increase their dividend right now, so why risk having to tell the press you were denied that request, when you know that in 6 months or a year, you will have no problem getting approval. Fix the problems and the rest takes care of itself over time...don't over-reach, don't assume, don't have grandiose visions until everything is fixed. If shareholders are impatient, then that is the shareholder's own issue to deal with. Cheers!
MrB Posted February 17, 2012 Posted February 17, 2012 If you don't ask, then you don't have to tell the world they said "no". I think Moynihan knows that it is 50/50 that they would be granted the chance to buy back shares or increase their dividend right now, so why risk having to tell the press you were denied that request, when you know that in 6 months or a year, you will have no problem getting approval. Fix the problems and the rest takes care of itself over time...don't over-reach, don't assume, don't have grandiose visions until everything is fixed. If shareholders are impatient, then that is the shareholder's own issue to deal with. Cheers! Reminds me of the recent statement by the CEO of AIG at Davos that they fixed the company and are looking to start making acquisitions again. I was thinking, "Oh no, here we go again. Off to the races". Presents a problem, because I kind of like the AIG story. On another note. 13 Feb interview with Berkowitz on Bloomberg where he talks about BAC again http://www.bloomberg.com/video/86252524/#ooid=V0bjFpMzqbpJflf8Oz2YTRBLxk3NgtZe Has some great advice right at the end for investors...."No free lunch" You have to do the homework.
Uccmal Posted February 17, 2012 Posted February 17, 2012 Top pick on BNN. Like the target price Bank of America (BAC NYSE) Bought August 2011 at $6.76. Bank of America still has lots of tough slogging ahead. Recent legal settlements will likely send the company back into the red and demands of regulators are always uncertain. Fortunately the bank had already reserved $11.8 billion for the recent mortgage settlement. However, the company has made major steps in its turnaround and recently five of the six divisions have been profitable. Insiders have been buying. Target price: $38.74 And that is from Benj Gallander of Contra the Heard. Him and his partner have a long term record around 20% - 20 years.
PlanMaestro Posted February 17, 2012 Posted February 17, 2012 Reminds me of the recent statement by the CEO of AIG at Davos that they fixed the company and are looking to start making acquisitions again. I was thinking, "Oh no, here we go again. Off to the races". Presents a problem, because I kind of like the AIG story. Miller or Benmosche? Do you have a link MrB? http://www.businessweek.com/news/2012-02-16/aig-s-sale-of-aia-could-cut-treasury-stake-benmosche-says.html
Grenville Posted March 1, 2012 Posted March 1, 2012 Article regarding Brian Moynihan's support of a Catholic school in Haiti and how his younger brother now runs it. "Interview: Bank of America CEO shows his other side -- in Haiti" http://www.reuters.com/article/2012/03/01/us-bankofamerica-haiti-idUSTRE8200QT20120301
PlanMaestro Posted March 16, 2012 Posted March 16, 2012 Well this is really fun! Eric, you are a character (smile). Not that I do not like paper profits.
ERICOPOLY Posted March 16, 2012 Author Posted March 16, 2012 It hasn't been this promising since 2009. Before that, 2006. Every three years? I'm going to be watching out for 2015.
moore_capital54 Posted March 16, 2012 Posted March 16, 2012 Great Job gents, just wanted to drop by and say hi. This year has been absolutely incredible for us.
PlanMaestro Posted March 16, 2012 Posted March 16, 2012 Great Job gents, just wanted to drop by and say hi. This year has been absolutely incredible for us. We should invite "Munger" to the celebration party.
moore_capital54 Posted September 11, 2012 Posted September 11, 2012 She's Back! Congrats Board, we are having a monster month here... going to be retesting our March highs due to averaging down over the summer.
Guest Dazel Posted September 11, 2012 Posted September 11, 2012 Moorecapital, Happy for you but I think we should leave it for now...$9 bucks is a joke price for this company. Start cheering at tangible book! Dazel
moore_capital54 Posted September 11, 2012 Posted September 11, 2012 Moorecapital, Happy for you but I think we should leave it for now...$9 bucks is a joke price for this company. Start cheering at tangible book! Dazel Agree Dazel, mate our juniors are next, I have a feeling the TSX V is primed.. our resource funds are up about 10% last 30 days :)
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